(Yicai Global) April 12 -- Deposits at 13 of China’s large banks increased by 12.4 percent last year from the year before, expanding at the fastest clip ever, as Chinese people’s appetite for investing and spending wanes amid a depressed real estate and capital market.

The 13 banks added CNY16.7 trillion (USD2.42 trillion) in customer deposits in 2022, bringing their total deposits to CNY150 trillion (USD21.8 billion), according to the financial reports released by six state-owned banks and seven listed commercial lenders.

Industrial & Commercial Bank of China, Agricultural Bank of China, Bank of China, China Merchants Bank and Minsheng Bank all said their deposits increased at “the fastest pace ever” in their reports.

Commercial lenders China Merchants Bank and Zheshang Bank both logged an over 18 percent surge in deposits, up 6 percentage points and 13 percentage points from their respective 2021 growth rates, and a big jump from the industry average growth rate of 8 percent. Only in 2016 did deposits at commercial lenders reach 11 percent. 

Agricultural Bank of China was the fastest growing of the state-owned banks, posting a 14.7 percent leap, almost twice the pace in 2021. Deposits at the six state-owned banks swelled 12.6 percent on average last year to CNY13.6 trillion (USD1.9 trillion), a big jump from the previous year’s 7.3 percent. 

And this year deposits continue to rise. Chinese-yuan deposits in the country’s banking sector soared 41 percent in the first quarter year on year to CNY15.4 trillion (USD2.2 trillion), almost equivalent to the amount added over the whole of 2022, according to data released by the People’s Bank of China yesterday. Of this, CNY9.9 trillion were household deposits.

As borrowing rates are lowered, the sharp increase in deposits is affecting the profitability of China’s banking sector. Interest payments by the 13 banks surged 16 percent last year from the year before to CNY2.5 trillion (USD382.9 billion), far higher than the increase of 7.5 percent in 2021.

In order to reduce costs, China’s banks trimmed their deposit rates twice last year, in April and September, and this month a number of smaller banks have decided to cut rates further. 

Editors: Tang Shihua, Kim Taylor