(Yicai Global) Sept. 15 -- China's main banks trimmed their deposit interest rates today for the second time this year to stay in line with recent reductions in the country’s benchmark lending rates.

Fixed deposit rates have come down by between 10 and 15 basis points at China’s five state-owned banks, namely Bank of China, Industrial and Commercial Bank of China, China Construction Bank, Bank of Communications and Agricultural Bank of China, according to Yicai Global research.

The interest rate for three-year fixed deposits was lowered 15 basis points to 2.6 percent and that of five-year fixed deposits by 10 basis points to 2.65 percent. Other large lenders, such as China Merchants Bank, made similar adjustments.

This round of rate cuts are as expected, market analysts said. The previous round was in April.

Interest rate margins are the main source of income for banks. However, since the start of the Covid-19 pandemic in 2020, the country’s central bank has been lowering the benchmark lending rate to boost liquidity in the economy. In May, it slashed the five-year LPR by 15 basis points and in August, reduced the one-year LPR by 5 bps and the five-year one by 15 bps.

As lending rates drop, so is lenders’ profitability. All five state-owned banks saw their profit growth slow down sharply in the first half from a year ago. ICBC, for example, logged a 4.9 percent jump in profit over the period at CNY17.1 billion (USD24.6 billion). This is a marked slowdown from last year’s 9.9 percent.

Editors: Dou Shicong, Kim Taylor