CITIC Bank: Abolition of Benchmark Deposit and Lending Rates Has No Overall Impact on Bank Interest Margins, DR Benchmark Rate Reform Impact Relatively Small

On November 3, a financial frontline news report stated that CITIC Bank Corporation Limited (ASX: 601998) held its 2026 third-quarter earnings briefing today.

The head of the asset-liability department responded to questions regarding the impact of benchmark interest rate reform on bank interest margins.

The official stated that the abolition of benchmark deposit and lending rates has no overall impact on bank interest margins.

This is mainly due to two aspects: from the deposit side, the benchmark rate is only used at the time of contract signing, and deposit pricing is primarily regulated by the market-oriented adjustment mechanism for deposit and lending rates, independent of the benchmark deposit rate.

On the lending side, since 2020, the loan pricing benchmark has been fully switched to LPR, and the original benchmark lending rate has effectively ceased to be used, meeting the conditions for retirement.

The official also pointed out that regarding the impact of DR benchmark rate reform on bank interest margins, the overall judgment is that it is relatively small, and at least under current circumstances, the impact is limited.

From a policy orientation perspective, the central bank has consistently adhered to the principle of interest margin neutrality, steadily advancing the use of the DR benchmark in accordance with market-oriented principles, avoiding significant impacts on interest margins due to DR implementation.

From the perspective of application progress, the central bank has not set explicit requirements for the DR benchmark switch, and each bank advances it according to its own actual situation.

Customers also need a certain process to accept DR loans, and currently, large-scale application of DR loans will take some time.

Therefore, in the short term, the impact on bank interest margins is limited.

From the perspective of loan pricing, the pricing of DR loan disbursements must also be no lower than the government bond rate for the same maturity.

Like LPR loans, it is protected by the bottom-line pricing formation for loans.