China big state banks to cut deposit rate from Thursday 

SEVERAL Chinese major state banks will lower the yuan deposit rates from Thursday (Jun 8), state media Securities Times reported, a move that could give more room for lower lending costs in an effort to boost the economy.

Some big state banks will cut interest rates on demand deposits by 5 basis points to 0.2 per cent, and cut rates on three-year and five-year time deposits by 15 basis points to 2.45 per cent and 2.5 per cent, respectively, according to the report on Wednesday (Jun 7).

The report did not name specific banks.

A Chinese self-regulatory body overseen by the central bank has asked major state-owned banks to lower the dollar deposit interest rates, four people with direct knowledge of the matter said on Tuesday.

“The government is taking note of the rapid weakening of market confidence and is urgently attempting... to help China banks stabilise NIM (net interest margin) and maintain lending capacity to support the real economy,” Citigroup analysts, including Judy Zhang, wrote in a note.

It will also create room for a benchmark loan prime rate cut in the second half of 2023 to help stabilise the faltering economy, the note said.

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In September, China’s major banks cut deposit rates across the broad for the first time since 2015. That was followed by rate cuts by smaller lenders. REUTERS