Widespread Adjustments to Deposit Products

A significant shift is occurring in the deposit product offerings of China's private banks. Customers have recently noticed that medium-to-long-term fixed deposit options, particularly those with 3-year and 5-year maturities, are becoming scarce or unavailable across multiple banking platforms.

Overview of Bank-Specific Changes

An examination of various bank apps reveals the scope of these changes:

  • 5-Year Products: Access to 5-year fixed deposits has been suspended or removed from the apps of several institutions, including Jilin Yiliong Bank, Weihai Blue Sea Bank, Hunan Sanxiang Bank, MyBank, Shanghai Huarui Bank, Jiangsu Susong Bank, and Beijing Zhongguancun Bank. Some list these products as "sold out," while others have simply delisted them.
  • Shorter-Term Products: The adjustment extends to shorter tenors. For instance, 2-year deposits are also unavailable at Yiliong Bank and Blue Sea Bank. Even 1-year products are affected at Blue Sea Bank and Huarui Bank, displayed as sold out or not offered.

The Driving Force: Narrowing Margins and Cost Control

Financial industry analysts point to a common underlying cause: the persistent decline in net interest margins (NIM). NIM, the difference between the interest banks earn on loans and pay on deposits, is a crucial profitability metric. Faced with pressure to support the real economy and declining market interest rates, banks are seeing compression on the asset (loan) side of their balance sheets. Managing liability (deposit) costs has thus become a priority. By phasing out or limiting access to medium-to-long-term deposits that typically carry higher interest rates, banks are taking proactive steps to control their funding expenses and improve their overall interest rate risk profile.

Implications for Savers and the Sector

For individual savers, this trend means fewer avenues for securing high-yield deposits, potentially prompting a review of personal investment strategies. For the banking sector, especially for agile private banks, it signals a strategic pivot away from competing solely on deposit rates toward a greater emphasis on balanced liability management and sustainable growth. Further optimization of deposit product pricing and tenor structures is anticipated in the coming period.