SHANGHAI (Reuters) – China’s five largest banks cut personal deposit rates starting on Thursday, according to information provided on banks’ mobile apps, a move that could ease recent cuts in lending rates to revive banks Margin pressure after business.
Banks including the Industrial and Commercial Bank of China, the world’s largest by assets, cut interest rates on three-year time deposits by basis points, the information showed.
One-year and five-year deposit rates are reduced by 10 basis points.
The official Securities Times earlier reported that some of China’s large state-owned commercial banks will cut personal deposit rates starting Thursday.
The move comes after China cut its benchmark lending rate last month, in which the one-year loan prime rate (LPR) was cut by 5 basis points to 3. 65%, the five-year LPR was significantly reduced 15 ) basis points to 4.10%.
The world’s second-largest economy narrowly avoided a contraction in the second quarter as the COVID- 19 lockdowns and slump in the housing sector severely hurt consumers and business confidence.
Lower deposit rates will help stabilize banks’ profitability and support capitalization, said Nicholas Zhu of Banking, Moody’s (NYSE: MCO ) analysts.
“Banks lowered corporate and mortgage yields in response to authorities’ demands to lower financing costs for the corporate sector and home buyers,” Zhu said.
“Reducing deposit costs will offset some of the pressure on NIM.”
Last month, some big banks warned that they were There are calls to increase lending to the real economy and the debt-laden real estate sector, whose profit margins will face a squeeze in the second half of the year.
The cut could make room for further cuts to the LPR, economists at Nomura wrote in a note.
Other banks cutting personal deposit rates on Thursday include China Construction Bank (OTC): CICHF) Corp, Agricultural Bank of China (OTC: ACGBF) , Bank of Communications and Bank of China.
