Beijing September 1 2023: Three of China's biggest banks on Friday cut interest rates on a range of yuan deposits from Friday, a move that could ease their pressure on contracting profit margins and provide more room for reducing lending costs amid a faltering economy.
The banks, including Industrial and Commercial Bank of China (601398.SS), and Agricultural Bank of China (601288.SS) on Friday cut their deposit rates by between five and 25 basis points, websites from each bank showed.
The lenders cut rates on one-year time deposits by 10 basis points (bps) to 1.55%, and two-year time deposit by 20 bps and three-year and five-year time deposits by 25 bps.
The deposit rate cut is the third such cut within a year, with the scale of cuts bigger than previous rounds in June and in September last year.
The cut will partially offset various pressures on banks' narrowing net interest margins - a key gauge of profitability, said Nicholas Zhu, a banking analyst at Moody's.
"The impact of the deposit rate cut is material, given that close to three quarters of Chinese banks' liabilities are deposits," Zhu said.
Some state-owned banks are expected to soon lower interest rates on existing mortgages as Beijing ramps up efforts to revive the debt-hit property sector and bolster a sputtering economy.
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