Core Viewpoint - The article discusses the ongoing decline in deposit interest rates in China, highlighting the inversion of interest rates between different deposit terms and the implications for banks' funding strategies [4][5][8]. Deposit Rate Trends - As of September 2025, the average interest rates for various deposit terms are as follows: 3-month at 0.944%, 6-month at 1.147%, 1-year at 1.277%, 2-year at 1.367%, 3-year at 1.688%, and 5-year at 1.519% [6][8]. - The rates have shown a downward trend, with the 3-year rate being higher than the 5-year rate, indicating a persistent inversion in the interest rates [5][9]. Market Reactions and Expectations - The decline in deposit rates is anticipated by the market, primarily due to the continuous pressure on net interest margins, which have decreased from 1.52% at the end of last year to 1.42% by the end of the second quarter of this year [8][9]. - Analysts suggest that banks are likely to continue adjusting deposit rates downward to optimize their funding structures and manage the costs associated with long-term deposits [10]. Large Denomination Certificates of Deposit (CDs) - The interest rate advantage of large denomination CDs is diminishing, with average rates for various terms in September 2025 being: 3-month at 1.134%, 6-month at 1.318%, 1-year at 1.394%, 2-year at 1.356%, 3-year at 1.729%, and 5-year at 1.610% [12]. - The rates for one-year and longer-term large denomination CDs are becoming comparable to regular deposit rates, indicating a narrowing of the interest rate spread [12]. Structural Deposit Products - The average term for structured deposits has increased to 106 days, with an average expected middle yield of 1.59% and an expected maximum yield of 2.09% [13]. - Different types of banks show varying trends in structured deposit yields, with state-owned banks offering a higher average expected maximum yield compared to joint-stock banks [13][14]. Conclusion - The overall trend indicates a continued downward pressure on deposit rates, with banks likely to maintain a strategy of encouraging short-term deposits over long-term ones to manage their funding costs effectively [10][12].

Group 1 - The average deposit rates for various terms have continued to decline, with the 3-month rate at 0.944%, 6-month at 1.147%, 1-year at 1.277%, 2-year at 1.367%, 3-year at 1.688%, and 5-year at 1.519% as of September 2025 [1][2] - The decline in deposit rates is attributed to ongoing pressure on net interest margins, which have decreased from 1.52% at the end of last year to 1.42% by the end of the second quarter of this year [3] - The phenomenon of inverted yield curves between short-term and long-term deposit rates remains significant, with the 3-year average rate exceeding the 5-year rate [3][4] Group 2 - The average rates for large-denomination certificates of deposit (CDs) have also shown a mixed trend, with the 3-month rate at 1.134%, 6-month at 1.318%, and 1-year at 1.394% [5][6] - The average expected middle yield for structured deposits has decreased to 1.59%, while the average expected maximum yield has increased to 2.09% [6][7] - The average term for structured deposits has increased across different types of banks, with foreign banks showing the longest average term of 405 days [6][7]

Core Viewpoint - Recent rounds of interest rate cuts have led to many village and town banks lowering their deposit rates, with some rates now equal to or lower than those of major state-owned banks [2][6]. Group 1: Interest Rate Cuts - A new round of LPR and deposit rate cuts was implemented on May 20, with major state-owned banks and some joint-stock banks lowering their rates simultaneously [3]. - In May, 15 out of 19 private banks reduced their interest rates, with a total of 22 cuts, marking a significant shift from previous gradual adjustments to more aggressive cuts [3]. - By July and August, while private banks stabilized their rates, village banks continued to lower their deposit rates further [3]. Group 2: Specific Rate Adjustments - Jilin Longtan Huayi Village Bank announced a reduction in deposit rates effective August 20, with rates for various terms lowered by 0.1 percentage points [4]. - BaiShan HunJiang Hengtai Village Bank also adjusted its rates, with reductions across multiple terms, including a 0.2 percentage point cut for three-year and five-year deposits [5]. - Shengzhou Ruifeng Village Bank reduced its rates significantly, with three-month to five-year rates dropping to as low as 1.3% [5]. Group 3: Comparison with State-Owned Banks - After multiple rounds of cuts, some deposit rates at smaller banks are now equal to or lower than those of major state-owned banks, which have rates of 0.65% to 1.3% across various terms [6]. - For instance, Shengzhou Ruifeng Village Bank's five-year deposit rate matches that of state-owned banks, while others like Guangzhou Huadu Chouzhou Village Bank offer rates below those of state-owned banks [6]. Group 4: Market Trends - Data from Rong360 indicates that bank deposit rates are in a downward trend, with average rates for various terms showing declines compared to June [7]. - The average three-month deposit rate is now at 0.943%, with significant decreases across all terms, indicating a broader market trend towards lower interest rates [7].

Group 1 - The six major banks collectively announced a reduction in deposit rates, with cuts ranging from 5 basis points (BP) to 25 BP, while the People's Bank of China (PBOC) lowered the Loan Prime Rate (LPR) by 10 BP for both one-year and five-year terms [1][2] - The reduction in deposit rates is the largest in recent years, with the one-year deposit rate falling below 1% for the first time, potentially leading to a shift of deposits towards non-bank financial institutions [1][6] - According to CICC's static calculations, the impact of the LPR and deposit rate cuts on banks' net interest margin (NIM), revenue, and profit is an increase of 7 BP, 3 BP, and 6 BP respectively, indicating a generally positive effect on banks [2][3] Group 2 - The adjusted interest rates for fixed-term deposits are now 0.95% for one year, 1.05% for two years, 1.25% for three years, and 1.3% for five years, with significant reductions in the longer-term rates [2] - The average reduction in deposit rates is approximately 16 BP, which is greater than the LPR cut, reflecting a protective measure for banks' interest margins [2][3] - The ongoing low interest rate environment is expected to alleviate debt burdens for enterprises and households, stimulate economic activity, and stabilize banks' asset quality, despite causing a significant impact on listed banks' operating income [2][4] Group 3 - The net interest margin for listed banks is projected to decline by 2.20% year-on-year in 2024, marking the second consecutive year of decline, with the average NIM expected to be 1.52% [4][5] - The first quarter of 2025 saw a further decrease in the net interest margin to 1.43%, which is significantly below the 1.8% warning level [4][5] - The trend of funds flowing from banks to non-bank financial institutions is exacerbated by the reduction in deposit rates, with a notable increase in bank liabilities to other financial companies [6]