Long-term deposit interest rates at multiple private banks drop to the "1" level

Reporter Peng Yan

Recently, many private banks have been rapidly lowering their medium- and long-term deposit rates. The interest rates for 2-year, 3-year, and 5-year fixed deposits have generally fallen below 2%, officially entering the “single-digit” era.

Recently, Shanghai Huarui Bank was the first to announce a rate cut, reducing the 2-year fixed deposit rate from 2% to 1.95% starting March 1. The 3-year rate was lowered from 2.05% to 2%, and the 5-year rate from 2% to 1.95%, with all maturities decreasing by 5 basis points. The 2-year and 5-year rates have officially fallen below the “2%” mark.

In mid-February, Tianjin Jincheng Bank and Jiangxi Yumin Bank simultaneously adjusted their fixed deposit rates. Among them, Tianjin Jincheng Bank’s fixed deposit rates for all terms have fully entered the “single-digit” range.

According to the Securities Daily, since the beginning of this year, Liaoning Zhenxing Bank, Anhui Xin’an Bank, and others have completed multiple rounds of rate adjustments. Medium- and long-term deposit rates have significantly declined, with some products experiencing inverted yield curves.

Data from the China Banking and Insurance Regulatory Commission for Q4 2025 show that by the end of Q4 2025, the net interest margin (NIM) of commercial banks was 1.42%, unchanged from Q3 and Q2. By institution type, private banks had a net interest margin of 3.83%, higher than the industry average but showing a slight narrowing trend.

Luo Feipeng, a researcher at China Postal Savings Bank, told Securities Daily that the recent rate cuts by several private banks for some medium- and long-term deposits below 2% are rational measures to address the continued narrowing of net interest margins. Amid last year’s significant decline in private banks’ NIM, lowering deposit rates reflects their dual pressures: squeezed asset yields and the difficulty of maintaining high-cost deposits. This move actively optimizes their liability structure. Although it weakens short-term attractiveness, it aligns with the industry trend of reducing costs and increasing efficiency.

Regarding industry impact, Tian Lihui, a finance professor at Nankai University, told Securities Daily that lowering deposit rates is a “double-edged sword” for private banks. In the short term, it significantly reduces funding costs, alleviates pressure on net interest margins, and improves profitability; but in the long term, it may weaken deposit attractiveness, intensify industry competition, and force banks to accelerate service upgrades. The industry will accelerate its differentiation. Leading banks can stabilize customers through brand advantages, while small and medium-sized banks need to maintain their core business through differentiated services. This shift from “scale-driven” to “quality-driven” is a crucial turning point for private banks, representing a necessary process for healthy industry cleansing and clearing obstacles to high-quality development.

Looking ahead, a low-interest-rate environment will become the norm, and the transformation direction for private banks will become clearer. Luo Feipeng believes that private banks need to shift from high-interest rate deposit gathering to “technology empowerment + differentiated services,” relying on digital risk control to deepen microfinance, increase fee-based income, and expand wealth management and fintech output. Future efforts should focus on expanding inclusive micro-loans, developing wealth management and fintech services, and optimizing asset structures to increase non-interest income. Additionally, with policy support, they should focus on manufacturing, import-export, and other corporate scenarios to build a lightweight, high-efficiency, sustainable model.