China’s biggest state-owned banks are launching a third round of deposit rate cuts in a year, as lenders work to maintain profitability amid shrinking margins and government policies aimed at boosting consumption and demand, reports Caixin. Industrial & Commercial Bank of China Ltd. said it will lower deposit rates by as much as 25 basis points on some tenors starting Dec. 22.
After the adjustment, the lender will pay an annual 1.45% for one-year deposits, down from 1.55%, and 1.65% on two-year deposit, down from 1.85%. It will pay 1.95% and 2% on three-year and five-year deposits, down from 2.2% and 2.25%, respectively.
China’s escalating push to have its banking behemoths support struggling property firms is adding to woes for the $57 trillion sector. Banks’ net interest margins slumped to a record low of 1.73% as of September, data showed. That is below a 1.8% threshold regarded as necessary to maintain reasonable profitability. Bad loans meanwhile have hit a new high, and a revenue growth streak since 2017 for some of the nation’s largest state banks may come to an end this year.