Multiple Small and Medium-sized Banks Lower Deposit Rates, Some Products Show Inverted Rate Structure

Dahe CaLiFang Reporter Yang Sa, Wu Haishu

Since March this year, several regional small and medium-sized banks have announced adjustments to their deposit interest rates. Some long-term products have seen rates fall below 2%, entering the “1” percent range, and some banks have experienced an “inverted” deposit rate phenomenon.

Recently, Dahe CaLiFang reporters visited and found that currently, major state-owned banks such as ICBC and Bank of China, as well as joint-stock banks like Minsheng Bank and CCB, have not yet adjusted their deposit rates. Staff members indicated, “There may be a reduction soon.”

Industry insiders told reporters that this round of deposit rate adjustments by small and medium-sized banks is essentially a proactive response under the pressure of narrowing interest spreads. The downward channel for deposit rates in these banks has opened, but the pace will be more cautious, and the trend will show clear differentiation.

Many small and medium-sized banks have lowered deposit rates, while major state-owned banks have not yet made new adjustments

Since March 10, Xinjiang Bank implemented new benchmark deposit rates for RMB deposits, which have decreased compared to May last year for demand deposits, fixed-term deposits, and negotiated deposits. The announcement states that the one-year fixed deposit rate is 1.15%, two-year 1.25%, three-year 1.35%, and five-year 1.35%. Previously, these were 1.25%, 1.35%, 1.45%, and 1.50%, respectively.

In addition to Xinjiang Bank, Shanghai Huarui Bank adjusted its benchmark deposit rates again after four months. Starting this month, the one-year fixed deposit rate is 1.5%, two-year 1.95%, three-year 2.00%, and five-year 1.95%. Previously, the rates were 2.00%, 2.05%, and 2.00%, all down by 5 basis points, with the two-year and five-year rates officially falling below 2%.

Heilongjiang Youyi Rural Commercial Bank also adjusted its deposit rates for demand deposits, three-year fixed deposits, and five-year fixed deposits starting in March. After the adjustment, the three-year rate is 1.75%, and the five-year rate is 1.6%, showing an “inverted” deposit rate similar to Shanghai Huarui Bank.

Have major state-owned banks and joint-stock banks changed their deposit rates? Recently, Dahe CaLiFang reporters visited several bank branches and found that some major state-owned banks and joint-stock banks have not yet made new adjustments.

According to ICBC’s rate schedule, fixed deposit rates generally remain below 2%, with the lowest one-year rate at less than 1% (0.95% for amounts between 50 yuan and 1,999.99 yuan), and the highest three-year rate at 1.55% (for amounts of 200,000 yuan and above). Staff said that since the rate adjustment last second half of last year, rates have remained at this level, but may continue to decrease. At Bank of China, staff stated that rates have not changed since the adjustment last May.

Additionally, Zheshang Bank’s one-year deposit rate is 1.30%, two-year 1.50%, and three-year up to 1.90% (minimum deposit of 200,000 yuan). Staff said these rates have been stable since the beginning of the year. Industrial Bank’s one-year fixed deposit rate is 1.30%, two-year 1.40%, and three-year 1.75%. Staff indicated these rates have been maintained since July last year, but further rate cuts are highly likely. Staff from CCB and Minsheng Bank also said there are no new deposit rate adjustments for now.

Deposit rate adjustments are proactive responses under the pressure of narrowing interest spreads

Zeng Gang, Chief Expert and Director of the Shanghai Financial and Development Laboratory, told Dahe CaLiFang that this round of deposit rate adjustments by small and medium-sized banks is fundamentally a proactive response to the pressure of shrinking interest spreads. In recent years, the Loan Prime Rate (LPR) has continued to decline, eroding asset yields. If deposit rates remain high, banks’ sustainability could be severely challenged.

Notably, this adjustment breaks the previous pattern of “major state-owned banks move first, followed by small and medium-sized banks.” Instead, rural commercial banks and village banks have taken the lead, showing the urgency for small and medium-sized banks to reduce liability costs. Behind the “interest rate inversion” is a new logic of refined liability management—actively shrinking long-term, high-cost funds to avoid locking in high interest burdens during a declining rate cycle.

“From the perspective of maintaining the sound operation of the banking system and promoting better financial services for the real economy, this adjustment is necessary and a rational choice under the current loose monetary policy environment,” Zeng Gang said.

Dong Ximiao, Chief Economist at Zhaolian and Deputy Director of the Shanghai Financial and Development Laboratory, told reporters that since the second half of 2025, many banks have accelerated their “opening red” campaigns to November or even October. To attract deposits and stabilize liabilities, some banks may temporarily raise deposit rates. After the peak of the “opening red” period, some banks are likely to lower rates, which is an objective trend.

The downward channel for deposit rates in small and medium-sized banks is opening, with clear differentiation in trends

Will the downward trend of deposit rates in small and medium-sized banks continue? Zeng Gang believes that based on current assessments, the downward channel has already opened, and the overall direction will not change. However, the pace will be more cautious, and trends will show clear differentiation.

Factors supporting continued rate declines mainly come from three aspects: first, the pressure on net interest margins remains; loan yields still have room to fall, and if banks do not reduce deposit costs accordingly, profitability will be further squeezed. Second, macro policy remains moderately accommodative, and the overall interest rate environment will stay relatively loose in the short term. Third, regulators continue to guide reasonable deposit pricing, and the chaotic competition for high-interest deposits is being orderly corrected.

“However, a uniform, across-the-board rate cut is unlikely. Some regional small and medium-sized banks, due to liquidity needs or market competition, may temporarily raise short-term deposit rates, resulting in a pattern of ‘long-term decline, short-term stabilization, with some rises and falls,’” Zeng Gang said.

As the one-year deposit rates of many banks fall below 1%, many depositors are seeking alternative options that balance returns and risk control.

Dong Ximiao believes that as deposit rates gradually decline, deposit funds are shifting from a pursuit of absolute safety to seeking a new balance among safety, returns, and liquidity. Since 2025, the stock market and wealth management markets have continued to rise, greatly attracting investors. Therefore, some deposits are flowing into wealth management products, stock markets, or other equity investments.

“In a low-interest-rate environment, proactive diversification has become an inevitable choice,” Dong Ximiao said. The structural opportunities in capital markets are worth noting, but they must match individual risk tolerance. Through scientific asset allocation, investors can aim for more reasonable returns while controlling overall risk. Additionally, active risk management should be strengthened, with appropriate allocation to insurance products, to build more resilient personal and family risk management systems.

Editor: Ren Haopeng | Proofreading: Zhang Yipeng | Review: Xu Jiao