All six of China’s big state-owned banks have implemented cut to their deposit rates, amidst a push from Chinese regulators for reductions to financing costs for the real economy.
As of 15 September Agricultural Bank of China (ABC), Bank of China (BOC), Bank of Communications (BOCOM), China Construction Bank (CCB), Industrial and Commercial Bank of China (ICBC) and Postal Savings Bank of China (PSBC) had all publicly announced reductions to their renminbi deposit rates.
ABC, BOC, BOCOM, CCB and ICBC had all reduced their deposit rates by the same amount, with demand deposit rates falling 5 basis points and three year fixed-term deposits declining 15 basis points to 2.6%.
Deposits of other tenures all saw 10 basis point rate reductions.
The cuts come after the big state-owned banks pushed through cuts of 10 basis points to the rates for 2-year and 3-year deposits back in April of this year.
Wen Bin (温彬), chief economist with China Minsheng Bank, said that the cuts to deposit rates by the big state-owned banks indicates that reforms to China’s interest rate regime are currently taking effect.
“After the rate for medium-term lending facilities (MLF) fell by 10 basis points in the middle of August, ahead of expectations, the yields on 10-year government bonds swiftly saw a sizeable decline.
“The 1-year and 5-year loan prime rates (LPR) then fell 5 basis points and 15 basis points respectively…these downward adjustments in deposit rates roughly consistent with the large-scale drops.”