Deposit interest rates have dropped again! After the "Good Start," banks are focusing on managing liability costs

At the start of the second quarter, many banks have successively issued announcements indicating that, starting April 1, they will lower the listed interest rates for some fixed-term deposits.

Author | Ye Maishui

Editor | Fang Haiping, Xiao Jia

Layout | Zheng Tang

At the start of the second quarter, many banks have successively issued announcements indicating that, starting April 1, they will lower the listed interest rates for some fixed-term deposits. This round of adjustments almost covers all long-, medium-, and short-term product categories, and some banks’ certain products were even lowered twice within a week.

Some analysts believe that banks repeatedly cutting deposit interest rates is mainly driven by the persistent pressure from net interest margins (NIM) staying at a low level. Judging from the bank annual reports just released, the NIM of the six major state-owned banks (the “six major banks”) still showed a downward trend last year.

Multiple banks cut deposit interest rates

Xiamen Bank announced on March 31 that, starting April 1, it will lower the listed interest rates for personal one-day and seven-day notice deposits by 5 basis points each, to annualized 0.6% and 0.9%, respectively. At the same time, for corporate notice deposits, the one-day and seven-day tenors will see even larger reductions of 30 basis points and 35 basis points, respectively, to annualized 0.35% and 0.6%.

In fact, the bank had already lowered deposit interest rates once before. On March 27, Xiamen Bank reduced the listed interest rates for personal one-year, three-year, five-year and one-day notice deposits by 10 basis points, 20 basis points, 20 basis points, and 5 basis points, respectively. Combined with this round of adjustments, the deposit product rates at the bank are already close to being lowered across the board. In particular, the listed interest rate for personal one-day notice deposits was lowered twice within less than a week, for a cumulative reduction of 10 basis points.

Fujian Haixia Bank also announced recently that, starting March 27, it would adjust the listed interest rates for negotiated deposits and one-day notice deposits, and starting April 1, it would adjust the listed interest rate for seven-day notice deposits, while keeping the rates for other tenors unchanged. After the adjustment, the listed rates for negotiated deposits, one-day notice deposits, and seven-day notice deposits were each lowered by 5 basis points, 10 basis points, and 20 basis points, respectively, compared with the beginning of January this year.

Jilin Bank, meanwhile, announced on April 1 that it would adjust the listed interest rates for RMB deposits, but only for its three-year fixed deposit products, reducing the annualized rate from 1.75% to 1.70%, a decrease of 5 basis points. After the adjustment, the spread between its three-year and five-year fixed deposit rates narrowed from 15 basis points to 10 basis points.

In addition, Xishang Bank stated that, starting April 1, it will adjust some deposit interest rates through mobile banking. The three-year and five-year fixed deposit interest rates will both be set to 1.8%, which is a reduction of 20 basis points compared with the current rates.

Jiangsu Nanjing Pukou Jingfa Village Bank took action even earlier, having lowered deposit interest rates consecutively twice since March. On March 9, it adjusted the one-year deposit rate from 1.85% to 1.65%, and the two-year deposit rate from 1.8% to 1.65%. On March 20, the bank lowered rates again: the one-year deposit rate fell to 1.5%, and the two-year deposit rate fell to 1.47%.

In addition, Shandong Chiping Hu Non? Rural Commercial Bank, Yunnan Yuanyuan North? Bank Village Bank, Xinjiang Bank, Shanghai Songjiang Fuming Village Bank, Heilongjiang Youyi Rural Commercial Bank, among others, all lowered their listed deposit interest rates in late March. The adjustment targets were mainly long-term fixed deposits, with reductions in the range of 5 to 30 basis points.

In terms of the scope of the adjustments, this round basically covers all time periods. However, the adjustment magnitude for long-term rates is more pronounced. Many banks have lowered their three-year and five-year deposit rates significantly, and for some banks, deposit interest rates across different tenors have largely leveled off or even shown an inverted structure—meaning long-term deposit interest rates are lower than short-term deposit interest rates.

For short-term deposit products, interest rates were lowered in a concentrated way. Industry insiders generally believe this reflects banks refocusing on liability cost management after the “opening red” drive.

Wang Pengbo, Chief Analyst at Botong Consulting, said that as the “opening red” campaign ends, the industry needs to refocus on liability cost control. Therefore, banks will actively reduce deposit costs and optimize maturity structures. In the future, more banks may follow to rebalance deposit interest rates.

The net interest margins of the six major banks are still trending downward

Behind the deposit interest rate cuts is, in fact, the pressure of continuously low net interest margins.

Recently, the National Financial Regulatory Administration released information on the main regulatory indicators for commercial banks in 2025. It shows that by the end of Q4 2025, the net interest margin of commercial banks remained at 1.42%, unchanged from the end of Q3. It has been stable at this level for three consecutive quarters, ending the previous many-year one-way downward trend.

By bank type, the industry’s interest margin shows differentiation. Small and medium-sized banks’ margins are relatively more stable: at year-end, large commercial banks, joint-stock banks, city commercial banks, and rural commercial banks had net interest margins of 1.30%, 1.56%, 1.37%, and 1.60%, respectively. Among them, rural commercial banks rose by 2 basis points compared with the end of Q3; joint-stock banks and city commercial banks were flat compared with the end of Q3; large commercial banks dipped slightly by 1 basis point; and foreign banks’ net interest margins fell by 0.03 percentage points compared with the end of Q3.

Luo Feipeng, a researcher at China Postal Savings Bank, analyzed that the pressure from net interest margin compression and the continued decline in loan-side interest rates are forcing banks to carry out more refined liability management—guiding funds to shift toward medium- and short-term tenors through interest rate inversion. At the same time, this also indicates that the process of deposit interest rate marketization is accelerating, with small and medium-sized banks shifting from extensive deposit gathering to differentiated competition. So far, some effects have already been achieved.

As for the recently disclosed financial reports, in 2025, the six major banks achieved “double positive growth” in both operating income and net profit. However, due to factors such as the decline in Loan Prime Rates (LPR), repricing of existing loans, and intensified deposit competition, the net interest margins of the six major banks still show a downward trend.

Specifically, Postal Savings Bank still maintains a relative advantage, with a net interest margin of 1.66%, the highest among the six major banks. The net interest margin of China Construction Bank is 1.34%. The net interest margins of the other banks are generally below 1.3%: Agricultural Bank at 1.28%, Industrial and Commercial Bank of China at 1.28%, Bank of China at 1.26%, and Bank of Communications at 1.20%.

In terms of the size of the decline, the net interest margins of all six banks fell compared with 2024. Among them, Bank of Communications narrowed by 7 basis points—the smallest decline. It is worth noting that although margins are still compressing, compared with the year-on-year decline in 2024, the overall NIM decline in 2025 has become more convergent. Specifically, the net interest margin decline of Bank of China and ICBC each decreased by 5 basis points less than in 2024; Agricultural Bank and China Construction Bank each had declines that were 4 basis points and 2 basis points less than in 2024, respectively.

Actually, since the second half of 2025, the market has already had some expectations that the net interest margins of the six major banks would stabilize. Based on the data at year-end, the net interest margins of ICBC and Bank of Communications were flat compared with the end of Q3 2025. The net interest margin decline at China Construction Bank and Postal Savings Bank by the end of 2025 also saw the downturn from the end of Q3 2025 controlled to within 0.01 to 0.02 percentage points. The stabilization signal was clearer on a quarter-over-quarter basis.

However, regarding the net interest margin issue, most analyses believe that it has already hit the bottom, and there is a higher likelihood of improvement in the future. According to calculations by Liu Chengxiang, an analyst at Kaiyuan Securities, if the People’s Bank of China cuts the reserve requirement ratio (RRR) by 50 BP in the first quarter of this year, it would boost the net interest margin of listed banks in 2026 by 0.46 BP. For state-owned banks / joint-stock banks / city commercial banks / rural commercial banks, the figure would be 0.42 BP / 0.54 BP / 0.54 BP / 0.60 BP, respectively.

In addition, the scale of maturing personal fixed deposits among commercial banks in 2026 is estimated to be about 47 trillion to 54 trillion yuan, of which the high-interest fixed deposit balance maturing in 2 years and above is about 25 trillion to 29 trillion yuan. For fixed deposits repriced at maturity in the first quarter, with declines of 15 BP, 60 BP, 135 BP, and 145 BP for one-, two-, three-, and five-year terms respectively, this could also improve the net interest margins of listed banks in 2026 by about 10 BP.

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