(Yicai) Oct. 18 -- China's six state-owned mega banks have lowered their deposit rates for the second time since the end of July and sixth time since September 2022.

Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank, Industrial and Commercial Bank of China, and Postal Savings Bank of China cut rates by 25 basis points today, after having reduced them by between 10 bps and 20 bps on July 25.

Three-month, six-month, one-year, and two-year rates now stand at 0.8 percent, 1 percent, 1.1 percent, and 1.2 percent, respectively, while the three- and five-year rates are 1.5 percent and 1.55 percent.

The latest move was not a surprise, having been flagged by People’s Bank of China Governor Pan Gongsheng late last month, when he said banks were expected to further trim deposit rates by between 20 bps and 50 bps in response to a big monetary policy stimulus.

That stimulus included paring the seven-day reverse repurchase rate by 20 bps to 1.5 percent, the steepest cut in nearly four years, so as to ease financing costs and lowering rates on existing mortgages.

The central bank has been cutting key interest rates, including policy and loan rates, to encourage lending and alleviate the financial burden on businesses and individuals. But with the rapid decline in lending rates, net interest margins at banks have shrunk to historic lows, necessitating lower deposit rates. Other lenders are expected to follow the big six soon.

The Bank of China’s think tank expects some households to start moving their deposits to smaller banks with slightly higher rates, while more savings are likely to flow into the asset management market, which carries higher risk but offers better returns.

Editors: Tang Shihua, Futura Costaglione