A new round of deposit interest rate cuts opens today! The biggest drop is 25 basis points, and the interest of 200,000 yuan saved for three years is 1,500 yuan less.

On May 20th, the market had expected a new round of deposit interest rate cuts to open. Six big state-owned banks and China Merchants Bank all announced the latest listing interest rates of RMB deposits in official website, which will be implemented from today. Every time the reporter noticed that this adjustment, the medium and long-term deposit interest rate dropped even more. Specifically, demand deposits are lowered by 5BP, and the interest rates for lump-sum deposit and withdrawal for three months, six months, one year and two years are all lowered by 15BP, and the interest rates for three years and five years are all lowered by 25BP.

"In fact, customers have expectations. I thought that the deposit interest rate would drop before, but I just don’t know when it will be implemented." The person in charge of a big bank outlet told reporters. Based on the current latest interest rate, if 200,000 yuan is deposited, the total interest for three years will be reduced by 1,500 yuan compared with before.

This is the seventh round of deposit listing interest rate reduction led by big banks since the establishment of the market-oriented adjustment mechanism of deposit interest rate in April 2022, and it is also the first time this year. Judging from the pace of downward adjustment of deposit interest rates in previous rounds, all of them are led by big banks, followed by stock banks, city commercial banks and rural commercial banks.

The reporter noticed that after the deposit interest rate of big banks was lowered today, some wealth management managers of stock banks actively opened their business, and informed customers through WeChat friends circle, etc., that some deposits above 2% still have quotas, and they can pay close attention to them if necessary. A wealth management manager said: "Today, our bank temporarily does not adjust, and it is estimated that it will be adjusted tomorrow, and it will be saved and cherished."

In addition, some wealth management managers recommend wealth management products to customers by lowering the deposit interest rate today. The reporter noted that the deposit interest rate has been declining in recent years, and the one-year deposit interest rate has fallen below 1% after this adjustment. In this context, will the phenomenon of "deposit moving" be further highlighted?

Some interviewees believe that lowering the deposit interest rate will objectively reduce the attractiveness of deposit products and bring incremental funds to the wealth management market. However, considering the low-risk preference of most depositors, it is not expected that there will be a large-scale "deposit move". In addition, because cash and bank deposits account for more than 20% of the wealth management asset allocation structure, the reduction of deposit interest rate will also bring income pressure to some wealth management products.

On May 20th, the six major banks collectively announced the adjustment of the deposit listing interest rate, and the current demand was lowered from 0.1% to 0.05%, a decrease of 5 BP. In the lump-sum deposit and lump-sum withdrawal time deposit, the three-month, six-month, one-year and two-year term declines are all 15BP, and the three-year and five-year declines are all 25BP. China Merchants Bank, a joint-stock bank, also lowered the deposit listing interest rate at the same time today, and the adjustment range of each term was consistent with that of the big bank.

Specifically, after this adjustment, the five major banks, namely Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank, Bank of China, Bank of Communications and China Merchants Bank, have lump-sum deposit and withdrawal rates of 0.65%, 0.85%, 0.95%, 1.25% and 1.5% respectively for three months, one year, two years, three years and five years.

The six-month and one-year lump-sum interest rates of the Postal Savings Bank are 0.86% and 0.98% respectively, which are slightly 1BP and 3BP higher than those of the above-mentioned banks for the same term, and the lump-sum interest rates for other terms are consistent with those of the above-mentioned banks.

For this round of deposit interest rate reduction, the market generally expected. On May 7, Pan Gongsheng, the governor of the central bank, announced a package of monetary policy measures such as interest rate reduction and RRR reduction at the press conference held by the the State Council Press Office, and mentioned that commercial banks would be guided to lower the deposit interest rate accordingly through the interest rate self-discipline mechanism.

"In order to implement the macro-control policy, after the central bank introduced a package of monetary policy measures such as interest rate cuts and RRR cuts, the interest rate of bank assets will be further reduced. In order to alleviate the pressure of net interest margin, the six major banks and China Merchants Bank took the lead in a new round of deposit interest rate adjustment. Subsequent small and medium-sized banks will follow up, and the subsequent adjustment space of large banks needs to look at the implementation effect of this round of regulation and control policies. " Yang Haiping, a special researcher of Beijing Wealth Management Industry Association, said in an interview with reporter WeChat.

"Under normal circumstances, large state-owned banks tend to take the lead in adjusting deposit interest rates because of their stable liabilities and strong customer base, thus establishing an’ anchor’ for the market; Subsequently, small and medium-sized banks followed up the downward adjustment in order to maintain the interest margin and refer to the market competition. " Ceng Gang, chief expert and director of the Shanghai Finance and Development Laboratory, said in an interview with reporter WeChat that, on the whole, the reduction of deposit interest rate by state-owned banks is an important part of the interest rate reduction policy on May 7.

Ceng Gang further explained that the transmission path of monetary policy interest rate cuts affecting the real economy is usually as follows: First, the central bank’s policy interest rate is lowered, which promotes the decline of the capital cost of the financial system; Second, state-owned banks first lowered the deposit interest rate and led the industry adjustment; Third, small and medium-sized banks have followed suit and successively lowered their prices, forming an industry linkage; Fourth, the downward trend of deposit interest rate has further reduced the loan interest rate and reduced the cost of entity financing.

The reporter noted that since the establishment of the market-oriented adjustment mechanism of deposit interest rate in April 2022, the deposit listing interest rate, led by big banks, has been lowered for seven rounds. Behind the continuous downward adjustment of deposit interest rates is the increasingly prominent spread pressure of the banking industry. According to the disclosure of the General Administration of Financial Supervision, in the first quarter of 2025, the net interest margin of commercial banks was 1.43%, down 0.09 percentage points from the previous quarter, hitting a record low, and deviating from the regulatory consensus level of 1.80%.

At the same time as the deposit interest rate was lowered, the latest LPR quotation was also released today. The one-year LPR was 3.0%, and the five-year LPR was 3.5%, both of which were 10BP lower than the previous period, which was also the first decline of LPR in a year.

Wang Qing, chief macro analyst of Oriental Jincheng, said: "Based on the current proportion of various types of deposits, we judge that after the six major banks cut the deposit interest rate and drive other commercial banks to follow up the adjustment, the overall deposit interest rate will be lowered by 0.11 to 0.13 percentage points, which can basically cover the impact of the lower LPR quotation on the bank’s asset-side income and stabilize the bank’s net interest margin."

Wen Bin, chief economist of China Minsheng Bank, believes that lowering the RRR and lowering the deposit listing interest rate will continue to improve the debt cost of banks. He said that last year, two reductions in the deposit listing interest rate, the suspension of "manual interest payment" and interbank deposit interest rate control made the bank’s debt cost control continue to be effective, which partially offset the downward pressure on the asset-side rate of return.

On May 15th, the RRR cut of 0.5 percentage point officially landed, providing the market with long-term liquidity of about 1 trillion yuan, optimizing the bank’s debt structure and saving the debt cost; At the same time, the structural policy tools cut interest rates by 25BP, which is expected to save the bank’s capital cost by about 15 billion to 20 billion yuan each year, and to some extent alleviate the pressure of narrowing the net interest margin.

"The reduction of deposit interest rate is greater than the decline of LPR, which also helps to reduce the cost of bank debt and create space for the downward adjustment of LPR quotation." Wen Bin said.

According to the calculation of the Bank Group of Zhongtai Securities Research Institute, this round of interest rate cuts, deposit interest rate cuts and RRR cuts are expected to increase the comprehensive level of bank interest margin by 2.9BP in 2025, and the reduction of deposit interest rate exceeds the decline of LPR, thus effectively supporting the interest margin.

Ceng Gang told reporters that for banks, lowering the deposit interest rate can effectively reduce the cost of capital and increase the net interest margin, thus enhancing their profitability and capital accumulation capacity, and at the same time improving their own business stability, providing space for subsequent expansion of credit supply. In addition, lowering the deposit interest rate can also guide more funds to flow to non-deposit financial products such as wealth management and funds, which will help banks adjust their asset-liability structure and expand their income sources.

In recent years, with the continuous decline of deposit interest rates, some depositors have turned their attention to bank wealth management products. After this adjustment, the one-year deposit rate has fallen below 1%. In this context, will the phenomenon of "deposit moving" be further highlighted?

Ming Ming, chief economist of CITIC Securities, mentioned in the research report that the new round of deposit interest rate cuts will help banks control interest costs, but at the same time it will also increase the difficulty of saving, and low-risk asset management products such as bank wealth management will usher in incremental funds. For the bond market, the reduction of deposit interest rate may push the broad-spectrum interest rate, including the national debt interest rate, down further. At the same time, it will also promote the "deposit moving" to continue, and the scale of financial management may exceed the historical high of 33 trillion yuan during the year.

"The downward adjustment of deposit interest rate objectively reduces the attractiveness of deposit products. It is expected that a certain proportion of deposits will look for alternative products, which is conducive to the scale of bank wealth management to a certain extent. However, it is difficult for the current public risk appetite to change greatly. Most ordinary people pay more attention to the safety of funds, so we judge that there will be no large-scale deposit move. " Yang Haiping told reporters.

In an interview with national business daily reporter WeChat, Wang Qing said that lowering the deposit interest rate, especially the medium and long-term deposit interest rate, will reduce the attractiveness of bank deposits, and depositors may readjust their asset allocation and transfer some deposits to wealth management products, bringing incremental funds to the wealth management market. However, it should be noted that in the asset allocation structure of wealth management, cash and bank deposits account for more than 20% (23% in the first quarter of 2025). Therefore, lowering the deposit interest rate will also bring income pressure to some wealth management products.

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