(Yicai) Jan. 9 -- Chinese commercial banks have launched promotions for their consumer loan products ahead of the Chinese New Year holidays, with preferential interest rates dropping to as low as 2.76 percent.

Joint-stock commercial bank China Minsheng Bank and city commercial lender Bank of Beijing trimmed their preferential interest rates for consumer loan products to 2.76 percent for loans of up to CNY300,0000 (USD40,920) and CNY1 million (USD136,400), respectively.

However, the preferential interest rates are only offered to specific groups of consumers, such as VIP customers and mortgage loan customers, a staffer at Minsheng Bank told Yicai.

The period before the Chinese New Year holiday is a peak season for lenders to issue consumer loans, industry insiders told Yicai. All banks hope to start the year on the right foot, striving to increase the volume of their loan business and enhance consumer stickiness and loyalty right at the beginning of the year, they added.

Low interest rates may encourage consumers to borrow, stimulating consumption, Ming Ming, chief economist at Citic Securities, told Yicai. However, the decline in loan interest rates will directly affect banks' net interest income and potentially exert pressure on their profitability.

"Even though it is possible for loan interest rates to further decline this year, the chances for consumer loans' interest rates to remain below 3 percent are low, mainly because of relatively fixed deposit costs," Xue Hongyan, vice president of the Star Atlas Financial Research Institute, told Yicai.

Moreover, consumer loan interest rates below 3 percent would be too much lower than mortgage interest rates, which may lead to some consumer loans flowing into the real estate or stock markets, violating regulations and bringing in new risks, Xue added.

Financial institutions should conduct strict qualification audits and checks on lenders to prevent consumer loan funds from being used illegally, such as real estate and stock market speculation, said Su Xiaorui, senior researcher at business services provider Suxi Zhiyan.

Meanwhile, the consumer loan interest rates of major state-owned banks remain above 3 percent. For example, the minimum interest rate on consumer loans at Bank of China is 3.4 percent, and that at Bank of Communications is 3.2 percent.

The fixed deposit interest rates of major state-owned lenders are below 2 percent, with their three-year deposit rate at only 1.5 percent. The three-year deposit rate of joint-stock banks is around 1.8 percent, while that of city commercial banks is between 2.15 percent and 2.75 percent.

Editors: Tang Shihua, Futura Costaglione