{"id":5925,"date":"2023-04-11T08:12:12","date_gmt":"2023-04-11T08:12:12","guid":{"rendered":"http:\/\/lynettelockhart.com\/client\/smaller-chinese-banks-cut\/"},"modified":"2023-04-11T08:14:01","modified_gmt":"2023-04-11T08:14:01","slug":"smaller-chinese-banks-cut","status":"publish","type":"post","link":"http:\/\/lynettelockhart.com\/client\/smaller-chinese-banks-cut\/","title":{"rendered":"Smaller Chinese banks cut deposit rates on squeezed margins"},"content":{"rendered":"

BEIJING (Reuters) – Several small and mid-sized banks in China have lowered their deposit interest rates, a move that could help ease costs as loan growth faces more pressure amid rising economic risks.<\/p>\n

Rural commercial banks and credit unions in Hubei and Henan provinces cut rates on a range of deposits over the weekend, following cuts at some regional lenders in the southern province of Guangdong last week, statements from the lenders showed.<\/p>\n

Henan LuoShan Rural Commercial Bank on Saturday lowered the interest rate for one-year deposits by 35 basis points (bps) to 1.9%, by 30 bps for two-year deposits to 2.4% and by 45 bps for three-year deposits to 2.85%, according to a statement.<\/p>\n

The move comes as lenders face rising pressure from narrower profit margins as China’s economy recovers from three years of harsh pandemic curbs and a property market slump. Household savings have surged while credit demand remains sluggish. <\/p>\n

China’s economy reopened after zero-COVID policies were lifted in December but commerce and domestic demand are not back to pre-pandemic levels. The foundation of the recovery is not yet solid, analysts warned.<\/p>\n

“Against the backdrop that financial institutions are encouraged to support the economy, lending rates have obviously fallen,” Ming Ming, a fixed income analyst at CITIC Securities, wrote in a research note released on Monday. <\/p>\n

“But the costs of liabilities of banks remain relatively rigid, and net interest margins continue to shrink, which added to their operating pressures,” he said.<\/p>\n

Nicholas Zhu, a banking analyst at Moody’s, said smaller banks’ pricing changes usually follow larger banks’ initiatives with a time lag. In September, China’s largest banks lowered deposit rates in their first broad-based move since 2015 to ease margin pressure. <\/p>\n

The deposit rate cuts by some Chinese banks in April were “normal behavior” guided by the self-disciplinary mechanism, the People’s Bank of China (PBOC) said in response to a Reuters request for comments, a mechanism that was rolled out for market-orientated pricing of interest rates.<\/p>\n

Lower deposit rates could also help ease banks’ margin pressures at a time when investors have raised their hopes for a cut in lending rates to prop up the economy.<\/p>\n

“The economy is still running below its potential,” said Zhiwei Zhang. “There is room for fiscal and monetary policies to boost growth further.”<\/p>\n

“With inflation dropping in China and the rate hike cycle in the U.S. coming to its end, the likelihood of a PBOC rate cut is rising,”\u00a0he said.<\/p>\n

\n

(Reporting by Ziyi Tang and Ryan Woo; Additional reporting by Winni Zhou; Editing by Jacqueline Wong)<\/p>\n

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BEIJING (Reuters) – Several small and mid-sized banks in China have lowered their deposit interest rates, a move that could help ease costs as loan growth faces more pressure amid rising economic risks. Rural commercial banks and credit unions in Hubei and Henan provinces cut rates on a range of deposits over the weekend, following […]<\/p>\n","protected":false},"author":8,"featured_media":5926,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[1213],"tags":[],"class_list":["post-5925","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-u-s-business"],"jetpack_featured_media_url":"http:\/\/lynettelockhart.com\/client\/wp-content\/uploads\/Reuters_Direct_Media\/USOnlineReportBusinessNews\/tagreuters.com2023binary_LYNXMPEJ3A080-VIEWIMAGE.jpg","_links":{"self":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/5925","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/comments?post=5925"}],"version-history":[{"count":1,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/5925\/revisions"}],"predecessor-version":[{"id":5927,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/5925\/revisions\/5927"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/media\/5926"}],"wp:attachment":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/media?parent=5925"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/categories?post=5925"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/tags?post=5925"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}