Core Viewpoint - Recent adjustments in fixed deposit products by banks, particularly the cancellation of five-year fixed deposits by certain banks, highlight a broader trend of declining deposit rates among small and medium-sized banks in response to net interest margin pressures [1][3][5]. Group 1: Deposit Rate Adjustments - Tuo Yuqi Mengyin Village Bank and Kundu Lun Mengyin Village Bank have announced the cancellation of five-year fixed deposit options, marking them as the first commercial banks to do so [1]. - The adjusted interest rates for various deposit products show a downward trend, with three-month, six-month, one-year, two-year, and three-year rates decreasing by 5 to 10 basis points [2][3]. - Other banks, such as Hainan Baoting Rongxing Village Bank, have also reduced their one-year, two-year, three-year, and five-year fixed deposit rates by up to 65 basis points [3]. Group 2: Market Trends and Implications - The trend of lowering deposit rates is not isolated, as numerous small and medium-sized banks have followed suit, with some products seeing reductions exceeding 60 basis points [3]. - A notable "term inversion" phenomenon is occurring, where long-term deposit rates are lower than short-term rates, indicating banks' reluctance to accept higher-cost long-term liabilities [5][7]. - Major banks, including state-owned and national joint-stock banks, are also experiencing similar trends, with three-year fixed deposit rates often exceeding five-year rates [7]. Group 3: Strategic Responses - Banks are adjusting their strategies to manage net interest margin pressures by reducing long-term deposit offerings and focusing on optimizing their liability structures [5][7]. - The banking sector is also exploring non-interest income sources, such as wealth management and custody services, to stabilize revenue and profits [7][8]. - The shift in deposit rates and the need for banks to adapt to a low-interest environment may prompt investors to consider alternative investment products, such as government bonds and low-risk bank wealth management products [8].

Core Viewpoint - Recent adjustments in fixed deposit rates by banks, particularly the cancellation of five-year fixed deposits by certain banks, reflect a broader trend among small and medium-sized banks to lower deposit rates in response to pressure on net interest margins [1][5]. Summary by Sections Deposit Rate Adjustments - The announcement from Tuyaqi Mengyin Village Bank and Kundu Lun Mengyin Village Bank indicates the cancellation of five-year fixed deposit options, marking them as the first commercial banks to do so [1]. - A table shows the adjusted rates for various deposit products, with significant reductions in rates for terms of three years and above [2]. Broader Market Trends - Over the past month, numerous small and medium-sized banks have followed suit in lowering deposit rates, with some products seeing declines exceeding 60 basis points [2]. - For instance, Hainan Baoting Rongxing Village Bank has reduced its one-year, two-year, three-year, and five-year fixed deposit rates by 65, 55, 20, and 15 basis points respectively [3]. Interest Rate Pressure - The banking sector is experiencing significant pressure on net interest margins, with the average net interest margin for commercial banks reported at 1.42%, a decrease of 1 basis point from the previous quarter [5]. - There is a notable "term inversion" phenomenon where long-term deposit rates are lower than short-term rates, indicating a reluctance among banks to accept higher-cost long-term liabilities [5]. Strategic Responses - Banks are actively adjusting their liability structures by lowering rates or reducing the supply of long-term products to manage costs [7]. - The trend of eliminating long-term high-cost liabilities has extended to large banks, with many no longer offering five-year large deposits [7]. Future Outlook - Analysts suggest that while interest income for commercial banks will continue to face pressure, the downward trend may ease due to several factors, including improved loan pricing and a better-performing capital market [8]. - The shift in deposit rates may prompt investors to diversify their portfolios towards lower-risk investment products, adapting to the changing financial landscape [8].

Core Viewpoint - The average deposit rates for various terms are declining, with a notable increase in the spread between short-term and long-term deposit rates, indicating a shift in banks' strategies to optimize their liability structures [1][4][9]. Deposit Rate Trends - As of March 2025, the average rates for different deposit terms are as follows: 3-month at 1.249%, 6-month at 1.449%, 1-year at 1.566%, 2-year at 1.666%, 3-year at 2.042%, and 5-year at 1.883% [1][3]. - The month-on-month changes show slight increases in short-term rates (3-month, 6-month, 1-year, and 2-year) while the 3-year and 5-year rates have decreased significantly [4]. Long-term vs Short-term Deposits - There is a strong willingness among depositors to store long-term deposits, leading banks to lower long-term deposit rates to manage the risks associated with high-interest liabilities [4][8]. - Analysts suggest that banks are adopting a "short-term pressure long-term" strategy to guide customers towards shorter-term deposits, reflecting a proactive approach to managing interest rate risks [4][5]. Large Certificate of Deposit (CD) Trends - The average rates for large CDs have also shown a downward trend, with the 3-month rate at 1.386%, 6-month at 1.610%, 1-year at 1.719%, 2-year at 1.867%, 3-year at 2.197%, and 5-year at 2.038% [5][6]. - The decline in large CD rates has led to a situation where the rates for 3-year and 5-year CDs are inverted, indicating a market shift [5][6]. Market Dynamics - The narrowing interest rate spread between large CDs and regular term deposits has resulted in decreased sales of large CDs, as customers find little incentive to choose them over regular deposits [7]. - Factors contributing to the decline in large CD rates include the need for banks to optimize their liability structures, the central bank's rate cuts, and a relatively relaxed market liquidity environment [7]. Structural Deposit Trends - The average term for structured deposits is 89 days, with a slight increase in the average expected yield to 1.96% [8]. - Different types of banks show varying average terms and yields for structured deposits, with state-owned banks having the shortest average term [8]. Future Outlook - Analysts predict that deposit rates are likely to continue declining due to multiple factors, including market expectations, policy rate adjustments, and the need for banks to control funding costs [9].