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Deposit Cuts Confirmed By Large Banks, Financial Regulators Speaking Today

CHINA

Headlines have crossed that large state owned banks have cut their demand deposit rates. ICBC and Agbank shifting this rate to 0.2% from 0.25%. Both banks also stated a cut on some yuan term-deposit rates as well (3yr by 15bps to 2.45%, 5yr to 2.50% (by the same amount)). Bank of China has also announced cuts. The move shouldn't come as a surprise, as there has been wire reports that China banks have been asked to do this in recent sessions (see this link).

  • The move is aimed at lowering costs for banks (supporting margins), which then should boost lending, while also reducing the incentive for consumers to place funds at banks (thereby aiding consumption).
  • The onshore Securities Times has also reported that the lower deposit rates should driver lower benchmark LPRs (loan prime rates), potentially in Q3 (see this link).
  • Headlines have also crossed that top financial regulator officials will also speak at a Shanghai Forum today. This includes PBoC Governor Yi Gang and CSRC Chairman Yi Huiman.
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