Core Viewpoint - The rapid response of small and medium-sized banks to the recent deposit rate cuts reflects their need to alleviate cost pressures and improve net interest margins amid a challenging financial environment [1][2][3]. Group 1: Deposit Rate Adjustments - As of May 27, several banks, including Shanghai Bank, Ningbo Bank, Jiangsu Bank, and Beijing Bank, have lowered their deposit rates following a lead from state-owned banks starting May 20 [1][2]. - Shanghai Bank's new deposit rates effective from May 24 are 1.15% for one year, 1.20% for two years, 1.25% for three years, and 1.30% for five years [2]. - Ningbo Bank's adjusted rates effective from May 26 are 0.80% for three months, 1.05% for six months, 1.25% for one year, 1.30% for two years, 1.55% for three years, and 1.60% for five years [2]. Group 2: Pressure on Small and Medium-Sized Banks - Small and medium-sized banks face more severe net interest margin pressures compared to larger banks, prompting them to quickly adjust deposit rates to avoid excessive narrowing of the interest spread [3]. - The People's Bank of China's recent interest rate cuts, including a 10 basis point reduction in the one-year and five-year Loan Prime Rates (LPR), have directly influenced these banks to adjust their deposit rates [3]. Group 3: Interest Rate Inversion - The recent adjustments have led to instances of deposit rate inversion, where shorter-term rates are higher than longer-term rates, as seen with New An Bank's two-year rate at 2.35% and three-year rate at 2.20% [4][5]. - The inversion is attributed to banks balancing the need to lower deposit costs while maintaining liquidity, as well as expectations of further rate declines [4][5]. Group 4: Strategic Adjustments - Small and medium-sized banks are increasingly focusing on attracting short-term deposits to optimize their asset-liability matching and reduce the risks associated with long-term liabilities [5]. - The preference for short-term funding is driven by the need to manage liquidity more effectively and to avoid locking in high-cost long-term deposits [5].