BEIJING: Several Chinese commercial banks cut interest rates on a range of yuan deposits from Monday, following their larger peers in a coordinated move to ease pressure on profit margins.
The deposit rate cuts follow a similar move by China’s biggest state lenders on Friday and marks the second such industry-wide cut within a year, with previous action taken in September.
Analysts expect the deposit rate cuts will provide more room for a further cut soon by the central bank in the reserve requirement ratio (RRR) to expand credit and boost investment spending.
Banks including China Merchants Bank Co Ltd, China Citic Bank Corp Ltd and China Minsheng Banking Corp Ltd cut rates on demand deposits by 5 basis points (bps) to 0.2%, the banks’ websites showed.
The lenders cut rates on two-year time deposits by 10 bps points, and three-year and five-year time deposits by 15 bps points.
The rate cuts will help ease pressure on lenders’ profit margins as savings held in banks had ballooned when the economy slowed during COVID-19 lockdowns.
Expectations of a cut in the RRR have grown as the world’s second largest economy lost momentum at the beginning of the second quarter, grappling with rising unemployment, rapidly worsening exports and a sluggish property market.
The People’s Bank of China will enhance “counter-cyclical” policy adjustments to fully support the real economy, central bank governor Yi Gang said in a meeting in Shanghai last week with financial institutions and companies, according to a statement.
The central bank will steadily lower funding costs of the real economy, it said.
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