Stress: 2nd-Tier City Deposit Rates Soar at End of Q1

Interest rates for mortgages and deposits are going up at the same time there's a massive rally in government bonds.
iFeng: 二线城市存款利率大幅上浮 一年定存利率超基准170%

With the continuous progress of the interest rate liberalization process, the “price gap” in bank deposit interest rates has become increasingly apparent.

Recently, the "Securities Daily" reporter visited and found that the current bank deposit rates represented by the city of Beijing did not show significant adjustments, while the interest rates of small and medium-sized banks in the second- and third-tier cities rose by a relatively large margin. The highest benchmark interest rate went up by 170%. In addition, the banks’ enthusiasm for issuing large certificates of deposit and raising interest rates has increased. Some banks have increased their interest rates on large deposit certificates, which have risen by up to 55% from the benchmark interest rate.

At the end of March this year, our reporter visited the Beijing area’s state-owned banks and found that, except for Bank of China’s short-term fixed deposit interest rates, which have risen by 40%, the highest floating rates of other large bank deposits have averaged between 20% and 30%. Bank deposit rates rose by more than 40% from the benchmark interest rate. Today, less than a month later, the reporter visited the survey again and found that major banks have not changed their interest rates on fixed deposits. However, a number of banks recently raised interest rates on large deposits one after another, and some city commercial banks have the highest interest rate on large deposit certificates, which is 52% higher than the benchmark.

Deposit interest rate rise eye-catching

In some second- and third-tier cities, some banks not only drastically increased deposit interest rates, but also raised interest rates on large deposit receipts. Our reporter found during the investigation that some bank deposits with one-year deposits had the highest interest rate of 170% over the benchmarks. The highest deposit price is 55% higher than the benchmark.

Among them, some city commercial banks in Xinghua City, Jiangsu Province, before this time, the rate of fixed deposits in each term floated 30%. After this time, the newspaper reporter found out that after dialing the bank outlets, the corresponding term deposit rates rose by 45%. The large amount of deposit certificates has been raised even more. Deposit interest rates for all periods prior to the RRR cut have risen by 45%, and they have risen by 55%.

At the same time, according to the “Securities Daily” reporter, some banks in Shenyang, Liaoning Province, will raise the interest rate for one-year deposits. Among them, the one-year fixed deposit interest rates of a rural commercial bank in Shenyang area and a city commercial bank in Liaoyang area were 4.05% and 3.6%, respectively, which was much higher than the interest rate of large deposit certificates in Beijing, and was 170% higher than the benchmark rate and 140% higher, respectively.

In the Hubei area, the interest rate for one-year deposits of individual urban commercial banks reached 2.94%, which was 96% higher than the benchmark interest rate. At the same time, the bank has also recently raised the interest rate on personal large deposit certificates, in which the 3-year large deposit bill interest rate has been raised from 3.99% to 4.26%, which has risen by about 55% over the benchmark interest rate after the increase.

According to industry sources, asset management regulations are about to come to an end, and bank assets are returning to the table. Many banks have responded to the bank's financial transformation pressures and storage pressures by issuing structured deposit products. After the floating ceiling on bank deposit interest rates was gradually liberalized, various types of banks not only adjusted the interest rate on large deposit certificates, but also made certain adjustments to other kinds of deposit products. Overall, bank deposit rates have remained stable or even upward.