(Yicai) Nov. 15 -- Chinese savers withdrew an additional CNY126.6 billion (USD17.5 billion) from banks last month compared with a year ago, shrinking household savings by CNY636.9 billion (USD88 billion) due to the ongoing impact of lower interest rates.
Major financial institutions have cut deposit rates three times in the last 14 months, the latest data from the People's Bank of China showed. There were cuts in September last year, and in June and September this year, according to a central bank report published earlier this month.
In September, new fixed-term deposit rates averaged 2.04 percent, down 0.4 percentage point from April 2022, it said.
Other short-term factors have also accelerated withdrawals, including a surge in tax payments due in October, said Liang Si, an analyst at the Bank of China's research institute. Government bond sales last month also prompted individuals and non-financial companies to pull funds, he added.
Last month, the yuan deposits of non-financial firms fell CNY865.2 billion (USD119.6 billion), according to PBOC data released on Nov. 13. But government deposits rose by CNY1.37 trillion (USD189.2 billion), with an increase of CNY506.8 billion (USD70 billion) from non-banking-financial institutions.
The increase in government deposits was mainly a result of the intensive sale of local government debt, which has yet to be used, Western Securities said in a research note.
The downward trend in interest rates may continue for a while, Ming Ming, chief economist at Citic Securities, told Yicai. In the short run, risk appetite will remain low among individuals and deposits should climb despite falling rates, he said. But in the mid-to-long term, deposited funds may be redirected into wealth management products, he noted.
Editors: Dou Shicong, Tom Litting