Mid-sized and small banks once again trigger a "rate-cutting wave," with some five-year interest rates lowered by as much as 30 basis points

After the Spring Festival, as the peak of deposit gathering during the “Opening Red” period gradually subsides, China’s banking industry is entering a new round of deposit interest rate cuts. This round of reductions was led by city commercial banks, rural commercial banks, and village banks, with adjustments ranging from 5 to 30 basis points. Some banks have cut the five-year fixed deposit interest rate by as much as 30 basis points.

On March 6, Xinjiang Bank announced that starting from the 10th, it would adjust the listed interest rates for RMB deposits. The rates for savings deposits, fixed deposits, negotiated deposits, and notice deposits all saw reductions, with the largest cut being 15 basis points (BP). Specifically, the interest rates for savings deposits and fixed deposits of three years or less generally decreased by 10 BP, while the five-year fixed deposit rate was cut by 15 BP. Additionally, negotiated deposits and 7-day notice deposits were both reduced by 10 BP, and the 1-day notice deposit rate was lowered by 5 BP.

After the adjustments, the bank’s listed interest rate for savings deposits has fallen to 0.05%, the half-year term deposit rate to 0.95%, and the listed rates for 1-year, 2-year, 3-year, and 5-year fixed deposits are 1.15%, 1.25%, 1.35%, and 1.35%, respectively.

Recently, Shanghai Huarui Bank also adjusted its two-year, three-year, and five-year fixed deposit rates to 1.95%, 2.00%, and 1.95%, respectively, each down by 5 basis points. The two-year and five-year rates have officially fallen below the “2” mark.

In addition, Yunnan Yuanjiang North Rural Bank announced that starting March 1, the five-year fixed deposit rate was reduced from 2.2% to 1.9%, a decrease of 30 basis points, making it one of the banks with the largest cut in this round.

Notably, after the adjustments, some banks have experienced “inverted” deposit rates. Shanghai Huarui Bank’s three-year rate of 2.00% is higher than the five-year rate of 1.95%. Heilongjiang Youyi Rural Commercial Bank’s three-year fixed deposit rate was adjusted to 1.75%, while the five-year rate is only 1.6%.

From May 2025, when state-owned major banks collectively cut interest rates, to subsequent rounds of adjustments by many small and medium-sized banks, and now the latest round after the Spring Festival, the market-oriented adjustment mechanism for bank deposit rates continues to play a role.

As of now, the listed deposit rates of small and medium-sized banks remain generally higher than those of large banks but are gradually aligning with state-owned banks. Since the large banks’ rate cuts in May last year, the listed interest rate for savings deposits has fallen to 0.05%, and the rates for three-year and five-year fixed deposits are 1.25% and 1.30%, respectively.

Recently, the overall trend in bank deposit interest rates has been downward, and the net interest margin of the banking industry remains under pressure.

According to data from the Financial Regulatory Administration, as of the end of Q4 2025, the net interest margin of commercial banks was 1.42%, at a historic low.

CITIC Securities predicts that in 2026, the decline in the banking industry’s net interest margin will narrow to about 4 basis points, marking the first annual decrease in interest spread since 2022, reaching a low single-digit level. Kaiyuan Securities also expects that listed banks’ net interest margin will slightly narrow by about 4 basis points this year, with most of the pressure concentrated in the first half of the year. Zheshang Securities believes that this year, the interest spread of listed banks may first decline and then stabilize, with a significantly narrower decrease compared to previous years.