China’s Biggest State Banks Cut Deposit Rates

Beijing
China’s biggest banks on Thursday said they have lowered interest rates on yuan deposits, in actions that could ease pressure on profit margins and reduce lending costs, providing some relief for the financial sector and wider economy.
Industrial and Commercial Bank of China Ltd, Agricultural Bank of China Ltd, Bank of China Ltd and China Construction Bank Corp all cut their rates from Thursday, websites from each bank showed. The state-backed banks cut rates on demand deposits by 5 basis points and three-year and five-year time deposits by 15 basis points. This is the second such cut within a year, with previous action taken in September.
China cut the RRR in March but has kept its benchmark lending rate unchanged this year, as widening yield differentials with the United States limited the scope for substantial monetary easing. Major state banks’ net interest margins have shrunk following pressure to lower borrowing cost for individuals and businesses to stimulate the economy, and as credit demand remains subdued.
China’s economy rebounded faster than expected in the first quarter but lost momentum at the beginning of the second, grappling with tumbling exports, a sluggish housing market and a high unemployment ratio. A regulatory body overseen by the People’s Bank of China has asked the lenders to also lower U.S. dollar deposit rates, four people with direct knowledge of the matter said on Tuesday.