The deposit rates of small and medium-sized banks have decreased, bank interest margins have stabilized, and attention is on Huaxia Bank ETF (515020) investment opportunities.

Since March, the domestic banking industry has experienced a new round of deposit interest rate cuts. This adjustment was led by city commercial banks, rural commercial banks, and other small and medium-sized banks, primarily lowering the quoted interest rates for long-term deposits. Some products saw reductions of up to 30 basis points (BP), and some banks even exhibited an inverted yield curve where the 5-year rate is lower than the 3-year rate. After the cuts, the deposit rates for small and medium-sized banks remain generally higher than those of state-owned banks. Industry experts expect market interest rates to continue declining in the future.

Industry insiders believe that this round of deposit rate adjustments features a clear trend of “small and medium-sized banks leading the decline, with long-term rates dominating.” This is driven by both policy guidance and banks’ own operational pressures. The phenomenon of deposit rate inversion reflects detailed liability management. Under the expectation of long-term declining interest rates, lowering long-term deposit rates can help avoid losses from “high-cost liabilities and low-yield assets,” and can also guide funds toward medium- and short-term maturities, improving liquidity. Overall, the fact that small and medium-sized banks are leading the rate cuts marks the beginning of a new downward cycle in the domestic deposit interest rate market.

China Galaxy Securities believes that maturing high-yield deposits in 2026 will become the main support for stabilizing net interest margins. From a stability perspective, most deposits are expected to be renewed at the banks after maturity, mainly due to the lower risk appetite of bank customers and the limited alternatives that meet their needs. Under neutral assumptions, approximately 22 trillion yuan of three-year deposits maturing in 2026 are expected to be renewed, positively impacting banks’ net interest margins by 11.75 BP.

Guolian Minsheng Securities states that, in the long term, the performance of listed banks is expected to remain stable with low valuation levels, and the overall sector is optimistic about long-term excess returns.

As of 14:42, the CSI Bank Index (399986) was up 0.40%. The component stocks, Chongqing Bank, increased by 2.17%; Shanghai Rural Commercial Bank, up 1.85%; and Huaxia Bank, up 1.56%. The Huaxia Bank Bank ETF (515020) rose by 0.54%, with the latest price at 1.69 yuan.

The Huaxia Bank ETF (515020) tracks the CSI Bank Index (399986) and has the lowest comprehensive fee rate among similar ETFs. Its connection funds are A-shares 008298; C-shares 008299; D-shares 024642.

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