(Yicai Global) Jan. 13 -- Small and medium-sized Chinese lenders are cutting the interest rates they offer on deposits, especially long-term deposits, and analysts expect low yields to be the norm for some time to come.

Guangdong Nan’ao Rural Commercial Bank trimmed the rate on its five-year fixed deposits by 0.25 percent and the yields on other types of deposits by 0.05 percent on Jan. 11. And XJ Bank in the Xinjiang Uyghur Autonomous Region recently adjusted its rate for five-year lump-sum term deposits to 3.7 percent from 3.85 percent.

"It is rare for banks to be lowering interest rates at this time of the year," an executive at a branch of an urban commercial bank told Yicai Global. Usually, lenders hike yields slightly at the beginning of a new year to attract more savings.

Banks are expecting the interest rate on newly issued loans to keep coming down, Wang Yifeng, chief financial industry analyst at Everbright Securities, told Yicai Global. Therefore they are not keen for customers to lock in deposits for more than three years. This is one of the main reasons they are cutting five-year deposit yields.

Big state banks and joint stock banks reduced their rates in September last year, so the smaller banks are just following in their footsteps, experts said.

"Urban and rural commercial banks tend to move slower than bigger ones as many chose to stand on the sidelines and watch what happens when others make their moves," the executive said.

By lowering deposit rates, it helps banks reduce pressure on profitability, ease the contraction of net interest spread and cut financing costs for real economic entities.

More banks will follow suit and there will be a sustained decrease in interest rates and low yields will the norm, experts said.

Editors: Liao Shumin, Kim Taylor