(Yicai Global) June 17 -- Chinese banks could further lower interest rates on high-value certificates of deposit amid robust demand, according a senior banking analyst.

Rates on large-denomination CDs still have room to fall as government policy guides banks to trim borrowing costs and ease the cost of financing for the real economy, Securities Daily reported today, citing Wang Yifeng, chief banking analyst at Everbright Securities.

A number of Chinese lenders recently cut rates on CDs, a type of time-locked savings account. The average is now below 3.5 percent, but some state-owned banks and joint-stock banks have slashed them to anywhere between 3 percent and 2 percent.

Despite lower returns and limited quotas, demand exceeds supply, according to account managers. Large-denomination CDs have higher interest rates and greater liquidity than other time deposits with similar maturities. They are also covered by deposit insurance funds, making them extremely low-risk.

“Even if the interest rate is reduced, CD products with low risk are still the first choice for financial management,” a bank client surnamed Zhao said.

The downward trend of risk-free market returns will continue, so investors should learn to balance risks and returns, said Dong Ximiao, chief researcher at Merchants Union Consumer Finance. If they want higher returns they must take more risk, said Dong, otherwise investors need to accept lower returns.

China allowed lenders to issue high-value CDs in June 2015 in a step toward interest rate liberalization.

Editor: Emmi Laine, Xiao Yi