China’s biggest banks on Thursday said they have lowered interest rates on yuan deposits, in actions that could ease pressure on profit margins and reduce lending costs, providing some relief for the financial sector and wider economy.
Industrial and Commercial Bank of China Ltd (601398.SS), Agricultural Bank of China Ltd (601288.SS), Bank of China Ltd (601988.SS) and China Construction Bank Corp (601939.SS) all cut their rates from Thursday, websites from each bank showed.
This is the second such cut within a year, with previous action taken in September.
“The deposit rate cuts will push savings into consumption and investment and ease the pressure on banks’ net interest margins (NIM), opening the door for further monetary stimulus,” said Gary Ng, Asia Pacific senior economist of Natixis.
China cut the RRR in March but has kept its benchmark lending rate unchanged this year, as widening yield differentials with the United States limited the scope for substantial monetary easing.
Major state banks’ net interest margins have shrunk following pressure to lower borrowing cost for individuals and businesses to stimulate the economy, and as credit demand remains subdued.
China’s economy rebounded faster than expected in the first quarter but lost momentum at the beginning of the second, grappling with tumbling exports, a sluggish housing market and a high unemployment ratio.
The benchmark CSI Banks Index (.CSI399986) rose 0.35% in morning trading on Thursday.