Small Banks Fight For Deposits

The PBOC's latest rate cut has some small banks offering deposits roughly equivalent to prime loan rates. Some banks are offering 5.7% interest on deposits, while the official lending rate for 5 years is 5.75%. These rates even exceed many WMP interest rates. Small banks tend to charge higher rates for deposits though.

The banks listed in the article are in areas hit by housing bubbles: Guiyang Bank, Guizhou Bank, Wenzhou Longwan Rural Cooperative, Ordos Rural Cooperative. One bank in Qiqihar, Heilongjiang is said to be offering high deposit rates, but it also charges nearly 10% for loans.

In accordance with the listed banks in 2014 reported that 19 listed banks in net interest income accounted for 80%, while the vast majority of agricultural firms that data are often more than 90%, even more than 95%. "In the absence of financial products and the rural tier cities, bank deposits almost the only financial channels, depositors very strong sensitivity to interest rates, banks raise deposit rates may have some economies of scale." Shanghai, a banking analyst at brokerage says another rankings relations and regional scale deposits are relatively large, this is the place to compare the value of the bank.

Guo Tian Yong believes that agricultural firms and local firms facing the city are mostly small and medium micro customers, even upside down close to the benchmark interest rate, does not mean not making any money. "Agricultural firms in the agriculture-related loans and small micro-loan pricing power is still relatively strong, lending rates are generally larger than the base rate." He said.

According to the reporter learned from executives at a rural bank in Qiqihar region, agricultural lending rates generally Bijizhunli rates go up more than 4 percent. "In addition, the central bank's quasi-directional and directional drop liquidity support is also part of the lower cost of capital." The village bank executives told reporters.

21st CBH: 小银行抢存款 5年定存利率高达5.7%