Interest rate cuts put China banks' profits on the line

Shanghai

CHINA'S banks are facing their toughest year since the onset of the global financial crisis in 2009, with interest rate cuts and liberalisation of the deposit rate system eating into their profit margins.

The People's Bank of China (PBOC) cut interest rates for the third time in six months on Sunday in a bid to lower companies' borrowing costs, while giving banks more flexibility over how much they pay depositors.