Core Viewpoint - The recent decision by the Tongyu County Mengyin Village Bank to cancel its five-year fixed deposit product reflects the broader trend among small and medium-sized banks to adjust their deposit structures in response to declining interest margins and pressures on profitability [1][2][5]. Group 1: Bank Adjustments - Tongyu County Mengyin Village Bank is the first commercial bank to eliminate the five-year fixed deposit product, indicating a direct transmission of pressure from declining interest margins to product offerings [2]. - The bank has also reduced interest rates on other fixed deposit products, with the one-year rate decreasing from 1.50% to 1.45%, the two-year rate from 1.60% to 1.55%, and the three-year rate from 1.95% to 1.85% [2]. - Other small and medium-sized banks have similarly announced reductions in deposit rates, with some experiencing cuts of up to 80 basis points [2]. Group 2: Industry Trends - The adjustments made by small and medium-sized banks are indicative of a larger industry trend, where banks are reluctant to accept longer-term deposits due to cost control and liability structure management [3]. - The five-year large denomination certificates of deposit (CDs) have also seen a decline, with many banks no longer offering them, and new issuances reflecting lower interest rates compared to previous offerings [4]. - Analysts suggest that the downward trend in net interest margins will likely continue, prompting more banks to adjust their long-term deposit products [5][6]. Group 3: Future Outlook - Industry experts predict that more banks may follow suit in adjusting their long-term deposit products as net interest margins remain under pressure [5]. - The ongoing decline in loan market quoted rates (LPR) and the need for banks to manage funding costs effectively will drive further reductions in deposit rates [6]. - Banks are expected to continue lowering deposit rates to alleviate the pressure on interest margins, with varying degrees of adjustment based on market competition and customer positioning [6].

Core Viewpoint - The recent trend of lowering deposit rates among small and medium-sized banks is driven by the need to optimize liability structures and control funding costs, amidst a backdrop of anticipated interest rate declines and the phenomenon of inverted deposit rates for different maturities [1][2][3][4] Group 1: Deposit Rate Adjustments - Several small and medium-sized banks, including Suzhou Commercial Bank and Pingyang Pudong Development Village Bank, have announced reductions in deposit rates, with some three-year and five-year rates decreasing by as much as 80 basis points [1][2] - Suzhou Commercial Bank will lower its three-year deposit rate from 2.2% to 2.1% starting October 22, with a minimum deposit requirement of 100,000 yuan [1] - The trend of rate reductions is not isolated, as multiple banks have made similar announcements, indicating a broader industry shift [2] Group 2: Inverted Deposit Rates - The phenomenon of inverted deposit rates, where shorter-term deposit rates exceed those of longer-term deposits, is becoming increasingly common across various types of banks, including state-owned and joint-stock banks [2][3] - For instance, China Construction Bank offers a three-year deposit rate of 1.55%, which is higher than its five-year rate of 1.3% [3] - This inversion is attributed to market expectations of further interest rate declines, leading banks to adjust their deposit offerings accordingly [3] Group 3: Liability Structure Adjustments - Industry experts suggest that the inverted deposit rates are linked to banks' efforts to adjust their liability structures in response to increasing pressure on the funding side [3][4] - Banks are actively lowering long-term deposit rates to optimize their funding costs and mitigate the impact of narrowing net interest margins [3] - The anticipated future decline in interest rates is prompting banks to reassess their deposit strategies to maintain operational efficiency [4]