Demand Deposit Rates at China’s Big Five Banks All Below Benchmark

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The latest data points to a widespread decline in account rates since the end of 2016, with demand deposit rates provided by China’s big five banks all falling below the benchmark rate.

Figures provided by Rong360 on the deposit rates of the 617 banks it monitors reveal a widespread decline in rates for accounts of varying terms during the first quarter of 2017.

The interest rates for demand deposit account provided by all of China’s big five banks are at 0.3%, which is below the current benchmark rate of 0.35%.

Interest rates for term deposits vary tremendously, however, with some of the state-owned and joint-stock banks providing exorbitant returns.

The Agricultural Bank of China and the Bank of Communications, for example, provide rates of as high as 40% for their six month or one year term deposits.

The joint-stock commercial banks generally provide higher rates than the state-owned big five lenders, with Minsheng Bank, Hengfeng Bank and China Bohai taking the lead.

Hengfeng had the highest one-year term deposit with a rate of 40%, while Minsheng provide a rate of up to 45% for a two-year term deposit.

Disparities between the deposit rates for the municipal commercial banks fell, with a maximum of 53.6%.

According to analysts the reason behind this is that municipal commercial banks tend to compete for deposits by means of strong rates, because they are regional lenders with limited networks and comparatively few branches.

Rong360 expects deposit rates to gain slightly in the second quarter, with municipal commercial banks providing higher returns as before.

Intense competition in first-tier cities in particular will compel deposit rates for their banks to remain at comparatively high levels.

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