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

Author: Chen Jiayi

With the wrap-up of the “early-bird bonus” period, many small and mid-sized banks have begun a new round of adjustments to their deposit listing (posted) interest rates. Jilin Bank, Xiamen Bank, Fujian Strait Bank, and others released announcements recently, lowering the posted interest rates for certain deposit terms. Previously, the posted interest rates on bank deposits had already gone through multiple rounds of reductions.

Analysts say that with the “early-bird bonus” phase at the beginning of the year coming to an end, and net interest margins continuing to face pressure, banks have entered a window period for centralized control of funding costs. It is expected that adjustments to posted deposit interest rates will continue, and overall they are showing a trend of gradual decline toward stabilization, along with differentiation in structure. In the low-interest-rate era, interviewees suggest that individual investors should adopt a diversified asset allocation approach to balance returns and risks.

Multiple banks lower deposit rates

On April 1, Jilin Bank announced an adjustment to its renminbi deposit listing (posted) interest rates. Among them, the annualized interest rate for three-year term fixed deposit products was lowered by 5 basis points, from 1.75% to 1.70%. After the adjustment, the spread inversion between the three-year and five-year fixed deposit rates at the bank narrowed to 10 basis points.

Xiamen Bank announced earlier that, effective April 1, it would adjust the posted interest rates of certain retail deposit products. It lowered the posted interest rates on one-day and seven-day notice deposits by 5 basis points each, bringing them down to 0.6% and 0.9%, respectively. Fujian Strait Bank also announced recently that, starting March 27, it would adjust the posted interest rates for term deposits by agreement and one-day notice deposits, and, starting April 1, it would adjust the posted interest rate for seven-day notice deposits.

Not only that, some banks lowered posted deposit interest rates multiple times within a short period. For example, Xiamen Bank previously cut the posted interest rates for individual one-year, three-year, and five-year deposits with principal and interest paid periodically, as well as one-day notice deposits on March 27, with reductions of 10 basis points, 20 basis points, 20 basis points, and 5 basis points, respectively.

Nanjing Pukou Jingfa Rural Bank adjusted posted renminbi deposit listing (posted) interest rates three times in March. Specifically: starting March 2, the interest rates for corporate and individual three-year and five-year deposits were adjusted from 2.2% to 1.88%; starting March 9, the interest rate for individual one-year deposits was adjusted from 1.85% to 1.65%, and the interest rates for corporate and individual two-year deposits were adjusted from 1.8% to 1.65%; starting March 20, it adjusted across the board the interest rates for individual and corporate term fixed deposits ranging from three months to five years.

“Stabilizing net interest margin” by controlling funding costs

Regarding the concentrated adjustments to posted deposit interest rates by multiple banks, analysts say: on one hand, as the “early-bird bonus” period wraps up, banks refocus on managing funding-cost control and reduce the deposit interest rates that had been temporarily raised during that period. Tian Lihui, a professor of finance at Nankai University, said in an interview with a reporter from Shanghai Securities News that after the “early-bird bonus” period ends, banks complete their phased deposit-attraction tasks. The downward pressure on deposit rates that had been temporarily suppressed to chase scale during the earlier period has been released in a concentrated way. On the other hand, against the backdrop of net interest margin pressure, lowering deposit interest rates has become a common choice across the banking industry for stabilizing net interest margins.

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

At present, it is the season for banks to disclose annual reports. In earnings briefings and annual reports, many listed banks have mentioned that net interest margins are expected to stabilize thereafter. On March 27, Yao Mingde, deputy head of Industrial and Commercial Bank of China, said at the 2025 annual results press conference that it expects the decline in net interest margins this year to narrow further compared with 2025. “In the short term, the downward trend of net interest margins has not changed. However, favorable factors for improving net interest margin performance are continuing to accumulate, and the momentum toward marginal stabilization is expected to continue.”

Future deposit rates may keep adjusting

When looking at a longer time horizon, it is already an established fact that deposit rates have been reduced. Looking ahead, analysts generally believe that future deposit-rate adjustments will likely show a pattern of gradual decline toward stability, along with differentiation in structure.

Tian Lihui said: on one hand, in 2026, a batch of high-interest term deposits will mature in a concentrated manner, and banks’ interest-paying costs are expected to improve significantly; on the other hand, net interest margins are already at a historically low level, leaving limited room for further substantial narrowing. Therefore, the room for deposit rates to keep falling is relatively limited, and overall the trend will be one of a gradual down-slope in interest rates, with differences in structure and more refined pricing.

Wang Pengbo, a senior analyst covering the financial industry at Orient Securities Analysis, expects that future adjustments to posted deposit interest rates will continue with a pattern of small, incremental changes and structural differentiation. Overall, the interest-rate “center of gravity” will still move steadily downward; the interest-rate spread between short and long terms will narrow somewhat; and the phenomenon of rate inversion may become even more common. Under the guidance of regulatory policies, interest rates will not fall in an uncoordinated way or result in malicious deposit-attraction; nor will there be a cliff-like drop. The adjustment magnitude by small and mid-sized banks will very likely remain greater than that of state-owned large banks. Interest rates on long-term deposit products will still have room to be lowered, and banks’ funding structure will also gradually tilt toward the medium- and short-term.

With continued reductions in deposit interest rates, the era when deposits “just sit and earn” has ended. Industry participants suggest that investors can make diversified asset allocations based on their own risk tolerance. Wang Pengbo said that against the backdrop of declining deposit appeal, individual investors are more suitable to adopt a tiered allocation approach to balance returns and liquidity.

Tian Lihui also believes that individual investors can consider building a tiered allocation structure of “cash management + fixed income + mid- to low-volatility equity.” The core principle is to accept the reality of low interest rates, replace single saving with diversified allocation, and replace the principal-protection mindset with risk management.

(Editor: Wen Jing)

Keywords:

                                                            Banks
                                                            Interest rates