Report Industry Investment Rating No information provided in the given report. Core Viewpoints - On May 20, state - owned banks cut RMB deposit rates, with the current deposit rate down 5 basis points to 0.05%, and various fixed - deposit rates also reduced. Meanwhile, the 1 - year and 5 - year - plus LPR were both down 10BP to 3.0% and 3.5% respectively, marking the full implementation of this round of policy rate, deposit rate, and LPR cuts [2]. - This round of LPR and deposit rate cuts is a continuation of the May interest - rate cut policy. It's an expected move as the central bank announced a reserve requirement ratio cut and hinted at LPR and deposit rate adjustments on May 7 [3]. - The overall reduction in deposit rates slightly exceeded expectations due to banks' large net interest margin and operational pressure. The net interest margin of banks dropped to 1.43% in Q1 this year, and the non - performing loan ratio in Q1 was 1.51%, higher than the net interest margin [3]. - The 1 - year and 5 - year LPR cuts of 10BP were in line with expectations. The LPR cut was smaller than the deposit rate cut to maintain banks' interest margins and considering the already low real - economy loan costs [4]. - In April, real - estate data weakened marginally, but the 5 - year - plus LPR was not significantly cut, indicating that the focus of real - estate stabilization policies may not be on the interest - rate side. However, the stock mortgage rate will continue to decline [5]. - The short - term wide - money game is over, and the next interest - rate cut window is expected at least in the third quarter. The probability of an interest - rate cut is decreasing in the next 90 days, but may increase if the Sino - US negotiation goes poorly [6]. Summary by Related Contents Impact on the Market - **Liability Effect**: Lower deposit rates may change residents' deposit intentions, leading to "deposit migration", putting short - term pressure on banks' liabilities and affecting certificate of deposit and fund trends [8]. - **Price - Comparison Effect**: LPR cuts will have a price - comparison effect on bond market interest rates through the bank asset side. A further decline in deposit rates will enhance the bond market's cost - effectiveness [8]. - **Benefit to Non - bank Allocation Demand**: A shift from low - interest and illiquid deposits to wealth management, bond funds, or insurance policies will benefit the bond market, especially short - and medium - term credit bonds [8]. - **Benefit to Stock Market Liquidity**: The continuous reduction in the opportunity cost of off - market funds helps the stock market re - evaluate, with a more direct positive impact on bank stocks and high - dividend stocks [8]. - **Impact on RMB Exchange Rate**: The decline in domestic broad - spectrum interest rates exerts some pressure on the RMB exchange rate, but the magnitude is limited [8]. Bond Market Situation - The bond market has already over - anticipated the interest - rate cut, and it has not yet emerged from the volatile pattern. However, in the medium term, the decline in broad - spectrum interest rates will have a positive impact on the bond market, and the lower limit of the 10 - year Treasury bond yield is lowered to 1.5% [9].