Major Chinese Banks Adjust Medium-to-Long-Term Deposit Products

As the year-end approaches, residents' demand for investment and savings has increased. However, some have noticed a reduction in medium-to-long-term deposit products in the market. What's behind this trend?

A Beijing resident, Ms. Wan, recently received her year-end bonus and planned to allocate funds to a 5-year large-denomination certificate of deposit (CD). However, after checking multiple banks, she couldn’t find a suitable product.

According to reports, searches on the mobile apps of China's six major state-owned banks—BANK OF CHINA, CCB, ICBC, ABC, BANKCOMM, and PSBC—reveal that 5-year large-denomination CDs are no longer available. Meanwhile, the interest rates for 3-year products have generally dropped to between 1.5% and 1.75%.

Additionally, some small and medium-sized banks have also begun adjusting their deposit offerings. For instance, Meizhou Hakka Bank recently announced the removal of its 5-year fixed deposit product, while Yillion Bank’s app no longer displays 5-year large-denomination CDs.

The phase-out of 5-year large-denomination CDs is not sudden. For example, BANK OF CHINA had previously issued a notice in May 2023 announcing the launch of its 2025 first-phase personal large-denomination CDs, covering seven tenors from 1 month to 5 years. At that time, the interest rates for 3-year and 5-year products were 1.55% and 1.6%, respectively, but were marked as "available only to specific clients." Now, searches show that 5-year large-denomination CDs are no longer listed for sale, with only a few available in the secondary market.

This trend is not limited to national banks; regional and private banks are also gradually following suit.

Zeng Gang, Director of the Shanghai Finance and Development Laboratory, explained that this adjustment is a necessary response to the ongoing decline in banks' net interest margins. With lending rates continuing to fall, banks' asset-side returns have significantly shrunk. Without cutting high-interest, long-term products, banks could face severe interest margin compression or even losses, posing risks to long-term stability and potentially leading to systemic issues.

Zeng added that this move could enhance banks' future profit predictability, providing fundamental support for valuation recovery. Large banks with low-cost liability advantages and high dividend yields may particularly attract long-term capital.

A senior banking analyst noted that this reflects a clear signal of banks' net interest margin pressures influencing liability-side product strategies. The impact extends beyond banks' cost control and may create room for future lending rate adjustments while directing funds toward capital markets.

Analysts believe that lower deposit rates could reduce their appeal, potentially driving some funds toward higher-yielding assets like stocks, bonds, and funds. If this "deposit migration" trend solidifies, it could positively influence the development of direct financing markets.