Small and medium-sized banks initiate a new round of deposit listing interest rate adjustments

◎Reporter Chen Jiayi

With the “strong start” phase wrapping up, many small and mid-sized banks have begun a new round of adjustments to their deposit listing interest rates. Jilin Bank, Xiamen Bank, Fujian Strait Bank, and others issued announcements recently, lowering the listed interest rates on certain term deposits. Previously, the banks’ deposit listing interest rates had already undergone multiple rounds of cuts.

Analysts say that as the “strong start” phase at the beginning of the year has ended, and with net interest margins continuing to come under pressure, banks have entered a window period for concentrated management of liability costs. It is expected that adjustments to deposit listing interest rates will continue as well, generally showing a pattern of gradual decline toward stabilization, with differences across product structures. In a low-interest-rate era, interviewees suggest that individual investors should adopt a diversified asset allocation approach to balance returns and risks.

Many Banks Cut Deposit Rates

On April 1, Jilin Bank announced adjustments to its RMB deposit listing interest rates. Among them, the annualized yield on three-year time deposit products was cut by 5 basis points, from 1.75% to 1.70%. After the adjustment, the yield inversion gap between the bank’s three-year and five-year fixed deposit rates narrowed to 10 basis points.

Xiamen Bank announced that, effective April 1, it would adjust the listing interest rates for some retail deposit products. It lowered the listing interest rates for one-day and seven-day notice deposits by 5 basis points each, bringing them to 0.6% and 0.9%, respectively. Fujian Strait Bank also announced recently that it would adjust the listing interest rates for current deposits and one-day notice deposits effective March 27, and would adjust the listing interest rate for seven-day notice deposits effective April 1.

In addition, some banks lowered their deposit listing interest rates multiple times within a short period. For example, Xiamen Bank previously reduced the listing interest rates for individual one-year, three-year, and five-year deposits for periodic withdrawals with interest, as well as one-day notice deposits on March 27. The cuts were 10 basis points, 20 basis points, 20 basis points, and 5 basis points, respectively.

Nanjing Pukou Jingfa Rural Bank made three adjustments to its RMB deposit listing interest rates in March. Specifically: starting March 2, the deposit rates for corporate and individual three-year and five-year deposits were adjusted from 2.2% to 1.88%; starting March 9, the one-year deposit rate for individuals was adjusted from 1.85% to 1.65%, and the two-year deposit rates for both corporate and individuals were adjusted from 1.8% to 1.65%; starting March 20, it adjusted across the board the fixed deposit rates for individuals and corporate entities for terms from three months to five years.

“Stabilizing net interest margins” by managing liability costs

Regarding the frequent adjustments to deposit listing interest rates by multiple banks, analysts say: on one hand, as the “strong start” phase ends, banks shift their focus back to liability cost management and cut the deposit rates that had been temporarily raised in that earlier phase to drive fundraising. Tian Lihui, a professor of finance at Nankai University, said in an interview with a reporter from Shanghai Securities News that after the “strong start” phase wraps up, banks complete their phased deposit-attraction tasks. The downward pressure on deposit rates that had been temporarily suppressed to rush for scale is released in concentrated fashion. On the other hand, against the backdrop of net interest margins under pressure, lowering deposit rates has become a common choice across the banking industry to stabilize net interest margins.

“Currently, China’s banking industry net interest margins are at a low level. Many small and mid-sized banks are cutting deposit listing interest rates to reduce liability costs and stabilize net interest margins, which also helps banks improve the sustainability of their services to the real economy,” said Lou Feipeng, a researcher at China Postal Savings Bank, to reporters.

At present, it is the season when annual reports are disclosed. Many listed banks mention in earnings briefings or annual reports that net interest margins are expected to stabilize and improve. On March 27, at the 2025 annual performance briefing, Yao Mingde, vice president of Industrial and Commercial Bank of China, said it is expected that the decline in net interest margins this year will further narrow compared with 2025. “In the short term, the downward trend in net interest margins has not changed, but favorable factors for improving net interest margins are continuing to accumulate, and the trend toward stabilization at the margin is expected to continue.”

Deposit interest rates may continue to be adjusted

If we look at a longer time horizon, the reduction in deposit interest rates is already an established fact. Looking ahead, analysts generally believe that future deposit interest rate adjustments may show a pattern of gradual decline toward stabilization, along with diversification by structure.

Tian Lihui said: on one hand, in 2026, a batch of high-interest fixed deposits will mature in concentrated fashion, and banks’ interest-paying costs are expected to improve significantly. On the other hand, net interest margins are already at a historical low, leaving limited room for further sharp narrowing. Therefore, the room for deposit interest rates to continue falling is relatively limited overall, and the trend is expected to include a gradual decline in rates (less steep), greater differentiation in structure, and more refined pricing.

Wang Pengbo, a senior analyst covering the financial industry at Bowen Analysis, expects that deposit listing interest rate adjustments will continue in a pattern of small, gradual changes and structural differentiation. Overall, the interest rate “center of gravity” will still move steadily downward. The spread between short- and long-term tenors may narrow somewhat, and the inverted-rate phenomenon may become more common. Under regulatory policy guidance, interest rates will not fall in an unregulated manner or lead to malicious deposit-attracting practices. There will also be no cliff-like drop. The scale of adjustments by small and mid-sized banks will likely remain greater than that of state-owned large banks. For long-term deposit products, there is still room for rate reductions, and banks’ liability structure will gradually tilt more toward the medium- and short-term.

As deposit interest rates continue to be cut, the era of “earning passively by just holding deposits” has ended. Industry participants suggest that investors may allocate diversified assets according to their own risk tolerance. Wang Pengbo said that amid declining attractiveness of deposits, individual investors are more suitable to adopt a tiered allocation approach to balance returns and liquidity.

Tian Lihui also believes that individual investors may consider building a tiered allocation structure of “cash management + fixed-income (or fixed-income style) + medium- to low-volatility equity.” The core principle is to accept the reality of a low-interest-rate environment, replace single savings with diversified allocation, and replace the mindset of principal protection with risk management.

(Editor: Qian Xiaorui)

Key words: