China’s largest state-owned banks have cut private deposit rates, according to Reuters

SHANGHAI (Reuters) – China’s five biggest banks cut personal deposit rates from Thursday, according to data on the lenders’ mobile apps, a move that could ease pressure on their margins after recent cuts in lending to stimulate the economy.

Banks, including the world’s largest bank by assets, Industrial and Commercial Bank of China Limited (ICBC), cut interest rates on three-year deposits by 15 basis points, the data showed.

Interest rates for one-year and five-year deposits were cut by 10 basis points.

The official Securities Times earlier reported that some of China’s largest state-owned commercial banks will cut personal deposit rates starting Thursday.

The move comes after China cut its benchmark lending rate last month, cutting the one-year lending rate (LPR) by 5 basis points to 3.65% and the five-year LPR by 15 basis points to 4.30% by a wide margin. .

The world’s second-largest economy narrowly avoided contracting in the second quarter as widespread Covid-19 lockdowns and a slumping property sector hit consumer and business confidence hard.

Lowering deposit rates will help stabilize banks’ profitability and support capitalization, said Moody’s (NYSE: ) banking analyst Nicholas Zhu.

“Banks have cut yields on corporate and mortgage loans in line with the authorities’ call for lower funding costs for the corporate sector and home buyers,” he said.

“Decreasing deposit costs will reduce pressure on NIM (net interest margin) reduction.”

Last month, some big banks warned of a hit to their margins in the second half of this year, following calls by Beijing to boost lending to the real economy and the debt-ridden asset sector.

The cut is likely to leave room for further cuts in LPR, Nomura economists wrote in a note.

Other banks that cut their personal deposit rates on Thursday included China Construction Bank (OTC: ) Corporation, Agricultural Bank of China (OTC: ), Bank of Communications and Bank of China.

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