The four largest banks in China, which include the Bank of China and China Construction Bank, all cut their deposit rates today (22 December).
The ‘big four’ reduced their one-year deposit rates by 10bps to 1.45% and three-year rates were cut by 25bps to 1.95%, their lowest levels since 1996.
This lowers to cost of funding for banks, allowing them to improve their profit margins as local banks suffer from turmoil in the property sector and local government budgets.
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Today’s cuts followed similar declines in June and September, as the country has worked to protect banks’ profitability and provide a buffer against economic headwinds as growth has continued to disappoint.
A cut from the country’s central bank, the People’s Bank of China, is largely expected next year, with some expecting it as soon as January. However, the central bank declined to cut interest rates at its meeting earlier this week.
