Core Viewpoint - The recent reduction in deposit rates by nine joint-stock banks follows the lead of the six major state-owned banks, indicating a broader trend in the banking sector to lower interest rates in response to the central bank's monetary policy adjustments [1][4]. Group 1: Deposit Rate Adjustments - On May 21, seven joint-stock banks announced a reduction in their deposit rates, with a decrease of 15 basis points for 3-month, 6-month, 1-year, and 2-year fixed deposits, and a 25 basis points reduction for 3-year and 5-year fixed deposits [1][2]. - The new deposit rates for various terms at China Merchants Bank are set at 0.95% for 1-year, 1.05% for 2-year, 1.25% for 3-year, and 1.30% for 5-year deposits, while other banks have slightly different rates [1][2]. Group 2: LPR and Monetary Policy - The Loan Prime Rate (LPR) was also adjusted downwards, with the 5-year LPR at 3.5% and the 1-year LPR at 3%, both down by 10 basis points [4]. - Analysts suggest that the central bank is establishing a transmission mechanism from policy rates to LPR and deposit rates, indicating a coordinated approach to monetary policy [4][6]. Group 3: Implications for the Financial Market - The reduction in deposit rates is expected to lower the cost of liabilities for financial institutions and enhance the attractiveness of bond assets compared to loan assets, potentially leading to increased investment in the bond market [4][6]. - The average reduction in deposit rates is greater than that of the LPR, which reflects a strategy to protect bank interest margins while supporting the real economy [6].

Core Viewpoint - The recent reduction in deposit rates by nine joint-stock banks follows the earlier actions of the six major state-owned banks, indicating a broader trend in the banking sector to lower interest rates in response to the People's Bank of China's (PBOC) adjustments to the Loan Prime Rate (LPR) [1][3][6] Group 1: Deposit Rate Adjustments - On May 21, seven joint-stock banks announced a reduction in their deposit rates, with a decrease of 15 basis points for 3-month, 6-month, 1-year, and 2-year fixed deposits, and a reduction of 25 basis points for 3-year and 5-year fixed deposits [1][2] - Specific rates for China Merchants Bank were adjusted to 0.95% for 1-year, 1.05% for 2-year, 1.25% for 3-year, and 1.30% for 5-year deposits, while other banks set their rates at 1.15%, 1.20%, 1.30%, and 1.35% respectively for similar terms [1][2] Group 2: LPR and Monetary Policy - The PBOC announced a decrease in the LPR, with the 1-year LPR at 3% and the 5-year LPR at 3.5%, both down by 10 basis points [3] - Analysts suggest that the PBOC is establishing a transmission mechanism from policy rates to LPR and deposit rates, indicating a coordinated approach to monetary policy [3][4] Group 3: Market Implications - The reduction in deposit rates is expected to enhance the attractiveness of bond assets by lowering the yield advantage of loan assets, thereby improving the configuration value of bonds [3][4] - The larger reduction in deposit rates compared to LPR is seen as a measure to protect bank interest margins while encouraging credit growth [6]

Core Points - The People's Bank of China (PBOC) has lowered the Loan Prime Rate (LPR) for the first time in 2023, with the one-year LPR set at 3.0% and the five-year LPR at 3.5%, both down by 10 basis points [1][2][3] - Major banks have also reduced their deposit rates, with rates for terms of three years and below decreased by 15 basis points, and rates for three years and above reduced by 25 basis points [1][5][6] - The adjustments in LPR and deposit rates are aimed at reducing the cost of liabilities for banks and providing more room for lending to the real economy [1][6][7] Group 1: LPR Adjustment - The LPR was adjusted downwards by 10 basis points, marking the first reduction of the year and the first since October of the previous year [2][3] - The reduction follows a decrease in the seven-day reverse repurchase rate, which serves as a new pricing anchor for the LPR [2][3][7] Group 2: Deposit Rate Changes - Six major banks, including the "Big Six" and China Merchants Bank, collectively announced a reduction in deposit rates, with the largest cuts seen in longer-term deposits [5][6][7] - The new rates for one-year deposits have fallen below 1%, while rates for three-year and above deposits are now below 1.5% [8][9] Group 3: Impact on Banking Sector - The reduction in deposit rates is expected to help stabilize net interest margins for banks, which have already been under pressure due to declining loan yields [6][7][9] - The banking sector is likely to focus more on reducing non-interest costs in the future, as credit costs have already decreased significantly [8][9]