China's Major Banks Cut Deposit Rates for Third Time in 2023

Move aims to ease pressure on net interest margins and improve profitability, paving the way for potential policy lending rate cuts by the People's Bank of China in January.

• China’s largest state-owned banks are lowering their deposit rates for the third time in 2023, in their latest effort to ease the pressure on their net interest margins (NIM) and to improve profitability.
• The Industrial and Commercial Bank of China, China Construction Bank, Agriculture Bank of China, Bank of China and Bank of Communications will cut deposit rates on some of their products by as much as 25 basis points.
• Lower deposit rates should help alleviate pressures on banks’ NIMs and lay the groundwork for the PBOC [People’s Bank of China] to cut its policy lending rates in January.
• Chinese banks’ profitability has come under pressure over the past year after authorities urged them to lower lending rates to support the country’s struggling property developers and to boost the real economy.
• After Friday’s adjustments, the banks will pay an annual interest of 1.45 per cent on one-year time deposits, down from 1.55 per cent.

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South China Morning Post CNA CNA