Core Viewpoint - The six major state-owned banks in China have collectively suspended the sale of 5-year large denomination certificates of deposit (CDs), reflecting a broader trend of adjustments in long-term deposit products among banks aimed at reducing liability costs and stabilizing net interest margins [1][2][9]. Group 1: Bank Actions - Major state-owned banks including ICBC, ABC, BOC, CCB, BOCOM, and PSBC have removed 5-year large denomination CDs from their offerings, which has garnered significant attention [2][3]. - Some state-owned banks had already stopped offering 5-year CDs prior to this collective action, indicating a shift in product availability [4][9]. - Several smaller banks have also followed suit, with institutions like Mengyin Village Bank and others announcing the cancellation of 5-year fixed deposit products [9][10]. Group 2: Market Trends - The adjustments in long-term deposit products are seen as a response to ongoing pressure on net interest margins, with the average net interest margin for commercial banks reported at 1.42% as of Q3 2025, with state-owned banks at 1.31% [9][10]. - The trend of suspending long-term deposit products is expected to continue, driven by the need to optimize liability structures and reduce high-cost deposits [10][11]. - The current low interest rate environment is prompting banks to shorten deposit terms and lower liability costs as a strategy to cope with declining asset yields [10][11]. Group 3: Investor Guidance - Investors are advised to adjust their expectations regarding investment returns and to adopt a diversified asset allocation strategy rather than relying solely on traditional deposit products [1][10]. - Suggested alternatives for short-term funds include money market funds and cash management products, while medium to long-term investments could focus on laddered deposits, savings bonds, or "fixed income plus" products [11]. - The emphasis is on balancing risk and return through a diversified portfolio to achieve stable returns in a declining interest rate environment [11].

Core Viewpoint - The long-term large-denomination certificates of deposit (CDs), once seen as a tool for attracting deposits, are gradually disappearing from the market, particularly the 5-year CDs, as banks aim to optimize their liability structure and stabilize net interest margins [1][2][3]. Summary by Sections Current Market Situation - Major state-owned banks and several joint-stock banks have removed 5-year large-denomination CDs from their apps, while 3-year CDs are still available but often marked as "sold out" or "in limited supply" [2][3]. - The interest rates for the remaining 3-year large-denomination CDs are concentrated in the range of 1.5% to 1.8% [2]. Bank Strategies - Banks are actively reducing high-cost long-term large-denomination CDs as a direct method to optimize their liability structure and stabilize net interest margins, which currently stand at 1.42%, remaining at historical lows [1][3]. - The net interest margins of most A-share banks have shown a downward trend, with state-owned banks experiencing an average decline of about 15 basis points [3]. Future Expectations - There is an expectation of further interest rate declines, prompting banks to reduce the issuance of long-term large-denomination CDs to avoid being locked into high-cost deposits as rates fall [3]. - Similar adjustments in deposit structures are observed in various local small and medium-sized banks, with some banks announcing the cancellation of 5-year fixed deposit products and lowering interest rates on other terms [3][4]. Investment Trends - Since the establishment of the market-oriented deposit rate adjustment mechanism in April 2022, major banks have reduced deposit rates in several rounds, with the latest cuts occurring in May 2023 [5]. - As interest rates decline, there is a shift in investor behavior towards diversified asset allocation, with a growing interest in low-risk investment products such as government bonds and bank wealth management products [5]. - According to a recent survey, 62.3% of urban residents prefer "more savings," a decrease of 1.5 percentage points from the previous quarter, while 18.5% prefer "more investments," an increase of 5.6 percentage points [5]. Future Growth Projections - A report from CITIC Securities anticipates that the growth of wealth management scale will continue to be driven by the "migration" of deposits towards various asset management products, with an expected growth of at least 10% in 2026 [6]. - If the wealth management scale reaches 34 trillion yuan by the end of 2025, it is projected to reach approximately 38 trillion yuan in 2026 [6].

Core Insights - The announcement from Inner Mongolia's Tongyu County Mengyin Village Bank regarding the cancellation of 5-year fixed deposits has drawn market attention, marking the first instance of such a move by a bank [1] - Many banks are suspending or have already removed 5-year specialty fixed deposit products, while 3-year specialty fixed deposits are becoming competitive and require prior reservation to secure [2][3] - The phenomenon of long-term deposit rates being lower than short-term rates has become commonplace, with several banks offering lower rates for 5-year deposits compared to 3-year deposits [4][5] Summary by Sections Deposit Rate Adjustments - Mengyin Village Bank has reduced its 5-year fixed deposit rate to 1.9%, which is only 0.5% higher than its 3-year fixed deposit rate before adjustments [1] - Other banks, including China Merchants Bank, have also suspended their 5-year specialty fixed deposit products, offering only standard fixed deposits at lower rates [2][3] Market Trends - The trend of long-term deposit rates being lower than short-term rates is evident, with banks like China Merchants Bank and SPDB offering 5-year fixed deposits at rates below 1.4% [4][5] - The average rate for 3-year specialty fixed deposits can reach up to 1.75%, making them more attractive compared to 5-year options [4] Future Outlook - Industry experts predict that deposit rates will continue to decline, leading banks to adjust their deposit products and strategies to manage costs effectively [6][7] - The narrowing of net interest margins across the banking sector is a significant concern, prompting banks to reconsider their long-term deposit offerings [8]

Core Viewpoint - Several banks are discontinuing long-term fixed deposit products, particularly 3-year and 5-year terms, in response to ongoing pressure on net interest margins and a shift in their profit models [2][8]. Summary by Sections Bank Actions - Multiple banks, including village banks, have announced the cancellation of 5-year fixed deposit products, with some also removing 3-year fixed deposits from their offerings [2][4]. - As of November 10, 9 private banks have removed 5-year fixed deposit products from their apps, and some have also discontinued 3-year fixed deposits [4][5]. Interest Rate Adjustments - Interest rates for 1-year and 3-year fixed deposits are now often higher than those for 5-year deposits, leading to a common phenomenon of "rate inversion" [2][5]. - For example, the Inner Mongolia Tuyuqi Mengyin Village Bank has adjusted its 1-year fixed deposit rate from 1.50% to 1.45% and its 3-year rate from 1.95% to 1.85% [3][6]. Market Trends - The trend of banks discontinuing long-term deposit products is primarily observed in smaller banks, while larger state-owned and joint-stock banks still offer 5-year fixed deposits [7][8]. - The maximum term for large-denomination certificates of deposit has also been reduced, with many banks no longer offering 5-year products and only providing 1-year options [7][8]. Profitability and Cost Management - Banks are actively managing their liability costs by reducing deposit rates and discontinuing high-cost deposit products, reflecting a shift towards more precise control over their funding sources [8][9]. - The net interest margin for many banks remains under pressure, with 14 out of 26 listed banks reporting a decline in this metric [8].

Core Viewpoint - The recent trend of interest rate cuts among small banks in China indicates a shift towards lower deposit rates, with expectations of further reductions by the central bank to alleviate net interest margin pressures [1][6]. Group 1: Interest Rate Cuts - Multiple small banks have announced reductions in deposit rates, with changes primarily affecting fixed-term deposits, showing declines between 15 to 55 basis points, and some banks reducing rates by as much as 80 basis points [3][4]. - For instance, Zhejiang Pingyang Pudong Village Bank adjusted its fixed-term deposit rates across various terms, with three-year deposits dropping by 80 basis points [3]. - Jiangsu Sushang Bank's three-year deposit rate is currently at 2.2%, while two-year rates are at 2.1%, indicating a competitive environment for attracting deposits [1][4]. Group 2: Rate Inversion Phenomenon - The occurrence of "inverted" deposit rates, where longer-term deposits yield lower rates than shorter-term ones, has been noted, such as Shanghai Huari Bank's three-year rate being higher than its five-year rate [4][5]. - This inversion is attributed to market expectations of future rate declines and banks' strategies to attract short-term deposits to match their lending profiles [5]. Group 3: Future Outlook - Analysts predict that the central bank may implement another round of interest rate cuts and reserve requirement ratio reductions by the end of the year, which could lead to further declines in deposit rates [6][7]. - The current economic environment, including external monetary policy trends and domestic fiscal measures, suggests that there is room for further adjustments in the Loan Prime Rate (LPR) [7][8].

Core Viewpoint - The large certificate of deposit (CD) market is experiencing a "dual climate" where large and joint-stock banks have reduced their annual interest rates to the "1" range, while some small and medium-sized banks offer rates exceeding 2%, but face tight quotas and rapid sell-outs [1] Group 1: Market Dynamics - The disparity in large CD interest rates reflects the marketization of deposit rates, which is a natural outcome of financial market operations [2] - If large, medium, and small banks had uniform CD rates, it would undermine the market's regulatory function and diminish competition among banks of different sizes [2] - The current situation is a result of the "Matthew Effect," where larger banks dominate the deposit market, potentially leading to a depletion of resources for smaller banks [2] Group 2: Bank Characteristics - Large banks possess strong capital, brand recognition, and extensive networks, allowing them to maintain stable funding sources and rely less on high-interest deposits, resulting in lower CD rates [3] - In contrast, small and medium-sized banks struggle with brand influence and customer recognition, necessitating higher CD rates to attract deposits [3] Group 3: Operational Pressures - The "dual climate" in CD rates is also driven by the operational realities faced by small and medium-sized banks, which have significant challenges in expanding their business and maintaining asset quality [4] - These banks often resort to offering high-interest CDs to attract customers and alleviate pressure on their liabilities, especially during critical assessment periods [4] Group 4: Short-term Strategies and Long-term Solutions - While raising CD rates can temporarily enhance deposit attraction for small banks, it is not a sustainable long-term strategy and may lead to increased operational risks [5] - Small banks need to innovate through digital marketing, flexible product offerings, and partnerships with third-party platforms to build a differentiated competitive edge and enhance customer loyalty [5]

Core Viewpoint - The upcoming National Day and Mid-Autumn Festival have triggered a new round of deposit marketing competition among local banks, with various promotional strategies being employed to attract depositors, including higher interest rates and gift incentives. However, the declining interest rate environment poses challenges for sustainable deposit structures and customer retention beyond mere financial incentives [1][5][10]. Group 1: Deposit Marketing Strategies - Local banks are intensifying their deposit marketing efforts by launching unique deposit products with slightly higher interest rates than standard fixed deposits, as well as implementing "points exchange" and "gift-giving" strategies to attract customers [1][3]. - For instance, Pujiang Rural Commercial Bank introduced a "Filial Piety Deposit" product with a starting amount of 100,000 yuan, offering a 3-year interest rate of 2%, which yields 6,000 yuan upon maturity [3]. - Similarly, Fudian Bank has diversified its deposit product offerings, including personal large-denomination certificates of deposit and special products for new customers, with interest rates ranging from 1.45% to 1.95% depending on the term [4]. Group 2: Challenges and Regulatory Concerns - The competitive advantage of local banks in terms of high interest rates has diminished due to multiple rounds of interest rate cuts, leading to a convergence towards industry averages [4][5]. - The use of gift incentives for deposit attraction raises regulatory concerns, as it may violate guidelines that prohibit improper methods of deposit solicitation, such as cash returns or gifts [9]. - Regulatory scrutiny has increased, with local banks facing pressure to comply with rules that restrict promotional practices that could be interpreted as disguised high-interest deposit solicitation [9][10]. Group 3: Long-term Strategies for Local Banks - To adapt to the low-interest-rate environment, local banks need to rethink their deposit strategies, focusing on building sustainable liability structures and enhancing customer loyalty beyond financial incentives [1][5][11]. - Experts suggest that local banks should improve their service capabilities, strengthen risk management, and develop long-term strategies to remain competitive in the market [6][11]. - Additionally, local banks are encouraged to integrate community financial services, leverage financial technology, and optimize liquidity management to reduce reliance on high-cost deposits and enhance operational efficiency [11][12].

Core Viewpoint - The upcoming National Day and Mid-Autumn Festival have triggered a new round of deposit marketing among local banks, with various promotional strategies being employed to attract depositors, including higher interest rates and gift incentives. However, the declining interest rate environment poses challenges for sustainable deposit growth and customer retention beyond mere financial incentives [1][5]. Group 1: Deposit Marketing Strategies - Local banks are intensifying their deposit marketing efforts by launching unique deposit products with slightly higher interest rates than standard fixed deposits, as well as implementing gift and points redemption strategies to attract customers [1][3]. - For instance, Pujiang Rural Commercial Bank introduced a "Filial Piety Deposit" product with a 3-year interest rate of 2% for a minimum deposit of 100,000 yuan, while standard fixed deposit rates for similar terms are lower [3]. - Fudian Bank has diversified its deposit product offerings, including large-denomination certificates of deposit and special products for new customers, with interest rates ranging from 1.45% to 1.95% depending on the term [4]. Group 2: Challenges and Regulatory Concerns - The competitive advantage of local banks in terms of high interest rates has diminished due to multiple rounds of rate cuts, leading to a convergence with industry averages [4][5]. - The use of gift incentives for deposit attraction raises regulatory concerns, as such practices may violate guidelines against improper deposit solicitation methods [8][12]. - The regulatory environment has tightened, with explicit prohibitions on using gifts or cash returns to attract deposits, which could impact the marketing strategies of local banks [8][12]. Group 3: Long-term Strategies for Sustainability - Experts suggest that local banks need to shift from price competition to enhancing non-price competitive advantages, such as improving service capabilities and risk management [5][9]. - There is a need for local banks to integrate financial services with community needs, leveraging public service scenarios to enhance customer loyalty and deposit retention [10][11]. - Innovations in financial technology, such as blockchain for smart settlements and big data for risk management, are recommended to improve operational efficiency and reduce reliance on high-cost deposits [11].

Core Viewpoint - The recent reduction in deposit rates by several major banks has led to a surge in demand for large-denomination certificates of deposit (CDs), resulting in a scarcity of available products in the market [1][2][10]. Group 1: Impact of Deposit Rate Cuts - Major state-owned banks have lowered their fixed deposit rates by 10 basis points for various terms, leading to a situation where products with annual interest rates above 3.5% are hard to find [2][6]. - The reduction in deposit rates is expected to lower banks' funding costs, which may facilitate a decrease in loan rates and improve the financing environment for businesses [11][14]. Group 2: Market Dynamics and Demand for Large-denomination CDs - The demand for large-denomination CDs has surged, with many banks reporting that their products are in short supply, necessitating advance reservations for purchases [10][12]. - The current liquidity in the market is reasonable, and the recent cut in the reserve requirement ratio by the central bank has released approximately 530 billion yuan, further supporting the downward trend in deposit rates [12][15]. Group 3: Future Trends in Deposit Rates - Experts predict that while the short-term reduction in deposit rates may be limited, a long-term downward trend is expected as banks seek to manage their liabilities and maintain net interest margins [13][15]. - The adjustment of deposit rates is seen as a strategy to optimize the structure and duration of bank deposits, which will help stabilize funding costs and support lending to the real economy [14][15].

Core Viewpoint - The recent reform of the deposit interest rate self-discipline pricing mechanism aims to promote the alignment of asset and liability pricing in banks, facilitating a more market-oriented approach to interest rates [1][2][3] Group 1: Market Rate Reform - The People's Bank of China (PBOC) has established a deposit interest rate marketization adjustment mechanism, allowing banks to adjust deposit rates based on the 10-year government bond yield and the 1-year Loan Prime Rate (LPR) [1] - This reform follows the previous adjustment in June, where the self-discipline upper limit for deposit rates was modified to include a certain basis point above the benchmark deposit rate [1][2] Group 2: Impact on Loan and Deposit Rates - The new mechanism encourages banks to reference market rates, which can more accurately reflect the supply and demand for funds, thereby enhancing the efficiency of monetary policy transmission [1][2] - By linking deposit rates to the LPR, which is influenced by the central bank's policy rates, the reform aims to create a dual influence between deposit rates and LPR, potentially leading to lower deposit rates and increased likelihood of LPR reductions [2][3] Group 3: Benefits for Banks and the Economy - The adjustment of the deposit interest rate mechanism is expected to lower banks' funding costs, which in turn can support a decrease in loan rates while maintaining banks' interest margins [3] - This approach is seen as a flexible and market-oriented alternative to direct interest rate cuts, allowing banks to enhance their lending capacity to the real economy amidst tightening monetary policies in developed economies [3]