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CHINA PRESS: Banks Seen To Cut Deposit Rates Further

CHINA PRESS
EM BulletAPACChinaEmerging Market NewsBulletGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets

Banks will likely further lower deposit rates to ease pressure on their shrinking net interest margin following the recent cut to existing housing mortgage rates, China Securities Journal reported citing analysts. The next round of deposit rate cuts may see a 0.2-0.25 percentage point reduction, analysts from Bank of China estimated. A 50 basis point cut to existing housing mortgages will lead to a 7bp reduction in the bank’s net interest margin as well as a 3% and 6% drop in operating income and net profit, said Dong Ximiao, chief researcher at Merchants Union Consumer Finance. The average net interest margin was 1.54% in Q2, still at a historical low, the newspaper added. 

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Banks will likely further lower deposit rates to ease pressure on their shrinking net interest margin following the recent cut to existing housing mortgage rates, China Securities Journal reported citing analysts. The next round of deposit rate cuts may see a 0.2-0.25 percentage point reduction, analysts from Bank of China estimated. A 50 basis point cut to existing housing mortgages will lead to a 7bp reduction in the bank’s net interest margin as well as a 3% and 6% drop in operating income and net profit, said Dong Ximiao, chief researcher at Merchants Union Consumer Finance. The average net interest margin was 1.54% in Q2, still at a historical low, the newspaper added.