Multiple small and medium-sized banks intensively cut deposit interest rates

This article is reproduced from: 老年日报

Multiple small and mid-sized banks have collectively and rapidly lowered deposit interest rates

“Rate inversion” has become a widespread phenomenon

Recently, many small and mid-sized banks have started a new round of deposit interest rate adjustments.

Since March, dozens of small and mid-sized banks, including Xinjiang Bank, Yunnan Yuangjiangbei Rural Bank, Heilongjiang Friendship Rural Commercial Bank, Nanjing Pukou Jingfa Rural Bank, and others, have collectively lowered their listed deposit interest rates. In particular, interest rates for 2-year, 3-year, and 5-year fixed-deposit products have generally fallen to below 2%, marking an official entry into the “1” prefix era.

For example, Xishang Bank stated that, effective April 1, the bank will adjust interest rates on certain deposits via its mobile banking app. The 3-year and 5-year fixed-deposit interest rates will both be adjusted to 1.8%, representing a reduction of 20 basis points compared with the current rates.

Nanjing Pukou Jingfa Rural Bank in Jiangsu has lowered its deposit interest rates twice in succession since March. On March 9, the bank adjusted the 1-year deposit interest rate from 1.85% to 1.65% and the 2-year deposit interest rate from 1.8% to 1.65%; on March 20, the bank reduced them again: the 1-year deposit interest rate fell to 1.5%, and the 2-year deposit interest rate fell to 1.47%.

On March 6, Xinjiang Bank issued an announcement stating that, effective on the 10th, it would adjust its RMB deposit listed interest rates. Interest rates for demand deposits, time deposits (fixed amount and fixed term), agreement deposits, and notice deposits were all lowered, with the maximum reduction being 15 BP (basis points). Among them, interest rates for demand deposits and fixed deposits with terms of 3 years and below were generally lowered by 10 BP, and the interest rate for 5-year fixed deposits was lowered by 15 BP.

During this round of rate cuts, “rate inversion” has become a common occurrence. The deposit interest rates for different terms at some banks have basically leveled off or even inverted—meaning long-term deposit rates are lower than short-term deposit rates. For example, after adjustments by Dalian Lvshunkou Mengyin Rural Bank, the 3-year fixed-deposit interest rate is 1.80%, higher than the 5-year rate of 1.60%.

At the same time, long-term deposit products are accelerating their exit from the market. According to a report by Beijing Business Today, among 19 private banks, 9 already cannot find 5-year deposit products on their apps, and some banks have effectively paused the addition of new mid-to-long-term fixed-deposit business. The six major state-owned commercial banks have also collectively removed 5-year large-denomination CDs in December 2025.

It is understood that this round of rate cuts is a rational choice by the banking industry to respond to the ongoing pressure of continuously narrowing net interest margins. Data from the National Financial Regulatory Administration show that, as of the end of Q4 2025, commercial banks’ net interest margin was 1.42%, unchanged from the end of Q3, but down significantly by 10 basis points compared with 1.52% at the end of 2024.

Looking ahead, industry participants generally believe that the downward trend in deposit interest rates will continue. CITIC Securities expects that in 2026, the decline in the banking industry’s net interest margin will narrow to about 4 basis points, marking the first time since 2022 that the annual margin decline will be in the low single digits.

Jiemian