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Some of China's commercial banks will reportedly further lower their yuan deposit rates by 10 to 25 basis points starting from September 1, which will be the third time since September 2022 and June 2023, in a bid to inject liquidity into the market.

The latest adjustment is targeting fixed term deposits and deposits of large amounts, the Securities Times reported on Thursday. The rate for one-year fixed deposits will fall 0.1 percent, the rate on two-year fixed deposits will fall 0.2 percent, and the rate for three- and five-year fixed deposits will fall 0.25 percent, said the report.

Industrial Bank will lower its rate on one-year fixed deposits by 10 basis points to 1.75 percent, and its rate on two-year fixed deposits fell by 20 basis points to 2 percent, the report said. The rates for three- and five-year fixed deposits will be dropped by 25 basis points to 2.25 percent and 2.3 percent, respectively. The new deposit rate will be commenced from September 1.

Major Chinese state banks officially lowered their yuan deposit rates on June 8, the second time since last September.

In June, the demand deposit rate fell from 0.25 percent to 0.2 percent. The rate on three-year fixed deposits was cut to 2.45 percent from 2.6 percent, while the rate on three-year fixed deposits dropped to 2.50 percent from 2.65 percent.

The move is expected to ease pressure on profit margins and inject liquidity into the bricks-and-mortar economy, experts said.

In the first half of 2023, commercial banks' aggregate net profit rose 2.6 percent year-on-year to 1.3 trillion yuan. The growth rate dropped by 4.5 percentage points from a year earlier, according to data from the National Financial Regulation Administration.

Data from the People's Bank of China (PBC), the central bank, showed that in the first half, total yuan deposits increased by 20.1 trillion yuan. Household deposits increased by 11.91 trillion yuan.

China's one-year loan prime rate (LPR), a market-based benchmark lending rate, was 3.45 percent in August, down 0.1 percent from July.

The second-quarter monetary policy implementation report published by the PBC on August 17 said the transformation of the interest rate market would continue, making full use of market-based adjustment mechanisms for deposit rates.

Global Times