The pace of deposit rate cuts accelerates among small and medium-sized banks

Since April, multiple city commercial banks and rural commercial banks have repeatedly cut deposit interest rates. Specifically, the deposit rate adjustment range covers mainstream products such as time deposits and demand deposits, with rate cuts ranging from several to dozens of basis points, and the timing of the rate cuts has noticeably accelerated.

In recent years, the deposit cost ratio of regional small and medium-sized banks has been declining year by year, and net interest margins have gradually stabilized. Analysts believe that for some banks, the deposit cost ratio in 2025 has already fallen into the “1-something” range, and the year-over-year decline has further widened. Multiple industry insiders analyzed that, as the banking industry’s net interest margin is currently at a historical low, future deposit rate adjustments may continue in a pattern of modest, gradual changes and structural differentiation. The interest-rate center will still steadily move downward.

The frequency of rate cuts is accelerating

The deposit cost ratios of multiple regional small and medium-sized banks are declining year by year. As of April 6, among seven regional banks that have disclosed their 2025 annual reports, six have seen their deposit cost ratios enter the “1-something” range. Among them, banks such as Zhangjiagang Rural Bank and Qingdao Bank have seen their deposit cost ratios drop by more than 30 basis points compared with 2024, and the year-over-year decline has further increased.

According to an incomplete count by a reporter, since late March, more than 30 small and medium-sized banks have cut deposit interest rates, and many banks have accelerated the frequency of deposit interest rate cuts.

Jilin Bank adjusted its posted deposit rates effective April 1, only one month after its previous adjustment. Specifically, the posted interest rate for three-year time deposits was lowered from 1.75% to 1.70%, a cut of 5 basis points.

Xiamen Bank has also recently issued an interest-rate adjustment announcement. Effective April 1, the bank’s posted interest rates for one-day demand deposits and seven-day demand deposits were lowered to 0.6% and 0.9%, respectively—each cut by 5 basis points. Notably, on March 27, the bank had already lowered deposit interest rates once. At that time, for time deposits, the interest rates for one-year, three-year, and five-year deposits were lowered by 10, 20, and 20 basis points, respectively.

Nanjing Pukou Jingfa Rural Bank has lowered its time-deposit interest rates twice since March. On March 9, it adjusted the one-year deposit rate from 1.85% to 1.65% and the two-year deposit rate from 1.8% to 1.65%. On March 20, it lowered the one-year deposit rate to 1.5% and the two-year deposit rate to 1.47%.

Returning to the goal of optimizing costs

Multiple small and medium-sized banks have canceled previously preferential interest rates, leading to deposit rate cuts. For example, Huixian Zhujiang Rural Bank implemented a new interest-rate policy effective April 2. Compared with the rate policy in late January this year, for this round the bank lowered the interest rates for six-month and five-year deposits by 15 and 25 basis points, respectively. At the same time, it canceled the tiered interest calculation model for one-year, two-year, and three-year deposits based on deposit amount. After the adjustment, the interest rates for one-year, two-year, and three-year deposits were lowered by 30, 27, and 13 basis points, respectively, compared with the previous maximum rates for the corresponding terms.

Another example is Luoning Rural Commercial Bank. Although it did not adjust its posted deposit interest rates, it adjusted its preferential deposit interest rates for deposits of 10,000 yuan (inclusive) and above. The bank canceled the preferential interest rate for five-year deposits. Its preferential interest rates for three-month, six-month, one-year, two-year, and three-year deposits were lowered by 23, 23, 25, 22, and 15 basis points, respectively, compared with January this year.

“Some banks have recently cut deposit interest rates by rolling back the preferential interest rates that were increased during the ‘Open for Business, Achieve a Great Start’ campaign back to normal ranges,” said a person in charge of retail business at a city commercial bank in North China. “Some smaller and medium-sized banks increase deposit interest rates in the short term to boost deposit growth. After the ‘Open for Business, Achieve a Great Start’ campaign ends, banks return to goals oriented toward net interest margin management and optimizing long-term liability costs.”

There is still room to lower interest rates on long-term deposits

Industry insiders believe that, given that the banking industry’s net interest margin as a whole is currently at a historical low, small and medium-sized banks’ deposit rate cuts are mainly intended to lower liability costs and stabilize net interest margins.

In the view of Wang Pengbo, chief analyst at Bocomm Consulting, future deposit interest-rate adjustments will continue to follow a pattern of modest, gradual changes and structural differentiation. The interest-rate center will still steadily move downward. There is still room to lower interest rates on long-term deposits, and banks’ liability structures will gradually tilt toward the medium- and short-term.

According to data disclosed by the National Financial Regulatory Administration, in 2025 the net interest margins of city commercial banks and rural commercial banks have clearly stabilized: city commercial banks’ net interest margins stayed at 1.37% across all four quarters, while rural commercial banks’ net interest margins were 1.58% in the first to third quarters, and in the fourth quarter they rose by 2 basis points quarter-on-quarter.