(Yicai Global) June 8 -- China's six biggest state-owned commercial banks cut deposit rates today for the second time since September, still leaving space for further reductions, according to industry insiders.

Agricultural Bank of China, Bank of Communications, Bank of China, China Construction Bank, Industrial and Commercial Bank of China, and Postal Savings Bank of China cut their nominal deposit rates by between five and 15 basis points, their mobile apps and websites showed.

The nominal rate on current deposits was cut by five bps to 0.2 percent, two-year deposit rates by 10 bps to 2.05 percent, and three-year and five-year deposit rates by 15 bps each to 2.45 percent and 2.5 percent, respectively.

Following the move, interest rates at the lenders have dropped to 2.5 percent or less, ending the 3 percent rate era for all of their deposit products.

Along with lower Chinese yuan deposit rates, many big banks have also cut their US dollar account rates since last month, Yicai Global learned. The highest-paying dollar account fell to 4.3 percent from between 4.7 percent and 4.8 percent.

Banks will likely trim yuan deposit rates again amid interest rate spread pressure and tougher credit requirements, according to industry insiders. The recent continuous decline in the yield on government bonds adds to the expectation. 

The latest rate cuts may ease the interest-bearing debt pressure on large banks, said Xiao Feifei, chief banking industry analyst at Citic Securities. Joint stock banks and urban and rural commercial lenders may follow suit, helping to improve the industry's overall debt-bearing costs, Xiao added.

The new lower rates can ease the industry’s debt-bearing costs by more than 3.5 bps, noted Dai Zhifeng, director of Zhongtai Securities' research institute. The lower rates on yuan accounts should mostly benefit large state-owned lenders and smaller rural commercial banks, while big state-owned and joint stock banks will benefit the most from the cuts in US dollar rates, Dai pointed out.

There is still space for further deposit rate cuts, helping economic entities keep their financing costs low, according to Xiao. Dai concurred, pointing to the relatively small adjustments made this time.

Editors: Tang Shihua, Martin Kadiev