Chinese yuan Photo:VCG

With more Chinese private banks including Wuhan Z-bank, Zhejiang E-Commerce Bank and WeBank having cut their deposit rates in September, experts said on Sunday that the move will reduce pressure on their liability expenses and enhance the sustainability of financial services to the real economy. 

There is scope for further rate cuts, which can lower borrowing costs, boost consumer spending and increase capital liquidity, the experts said.

On Friday, Wuhan Z-bank in Central China's Hubei Province said it would adjust the annualized rates on demand and time deposit products, to be effective from Wednesday. 

The rate on three-year fixed deposits will be cut from 2.4 percent to 2.15 percent, and that on five-year fixed deposits will be reduced from 2.45 percent to 2.2 percent.

Wuhan Z-bank isn't alone in making such moves. At the end of July this year, state-owned banks took the lead in cutting deposit rates. Now, the trend has spread to private banks, which are known for high interest rates.

Zhejiang E-Commerce Bank on September 13 reduced its annual rate on three-year time deposits to 2.3 percent and that on two-year time deposits to 2.0 percent.

WeBank, based in Shenzhen, South China's Guangdong Province, cut the annual interest rates on a number of personal deposit products effective on September 9. 

The interest rate for five-year whole deposit products was adjusted to 2.20 percent from 2.45 percent, while the interest rate for three-year whole deposits was reset to 2.30 percent from 2.45 percent.

"Amid declining lending rates, the private banks' move is intended to reduce their pressure on liability expenses and ensure a reasonable profit margin," Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Sunday.

The recent deposit rate cuts by small and medium-sized banks are just a continuation of deposit rate cuts that began in June, Xi said.

On June 25, some major state-owned banks including the Industrial and Commercial Bank of China and Agricultural Bank of China cut their deposit rates by 5-20 basis points. In addition, 10 Chinese commercial banks simultaneously cut deposit interest rates on June 29.

Xi said that there is still room for further rate cuts, and this trend will encourage consumers to spend instead of keeping their money in a bank deposit, promote the optimization of asset allocation and enhance the momentum of capital flows to the market, thereby increasing the vitality of the financial market and consolidating the economic upturn.