(Yicai) Aug. 31 -- A number of small- and mid-sized Chinese commercial banks will lower the interest rates that they offer on deposit accounts for the third time in a year tomorrow, Yicai learned.

The lenders will cut deposit rates by five to 25 basis points, according to banking industry sources.

“Our bank will cut the three-year deposit interest rate to 3.2 percent from 3.25 percent, and the deposit interest rates for other periods by about 5 bps as well,” said a staffer at an urban commercial bank. “It is possible the three-year deposit interest rate will be cut further to around 3 percent by the end of the year.”

A person working in the personal finance department of a joint-stock bank told Yicai that their bank may trim the rates on different deposit maturities by between 10 bps and 25 bps.

With smaller banks already preparing for a rate cut tomorrow, some sources at larger state-owned or joint stock banks told Yicai that they have not received any notice regarding the degree of their bank’s potential rate cut will be.

By cutting deposit rates, the banks aim to ease the pressure of narrowing net interest margins caused by lower lending rates, financial experts told Yicai. Mortgage rates are coming down in some places, especially in second- and third-tier cities. Rates on personal loans are also falling, even below 3 percent with discounts at one lender. 

Of the 42 banks listed in the Chinese mainland that have released semi-annual earnings results, 39 saw their net interest margin narrow as of June 30 from the end of last year. Bank of Qingdao and Jiangsu Jiangyin Rural Commercial Bank were the only ones to report an increase, while it was stable at Bank of Nanjing.

Deposit interest rates were last lowered in September 2022.

Editors: Tang Shihua, Futura Costaglione