Large banks lead the way in interest rate cuts again, with three-year deposit interest rates lower than Alipay. What to do?

On May 20, with the opening of branches of the six major state-owned banks, as well as China Merchants Bank and CEB Bank, a new round of deposit rate cuts "arrived as expected."

This deposit "rate cut" involves almost all savings products of major state-owned banks and large joint-stock banks, including Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, Bank of Communications, Postal Savings Bank of China, China Merchants Bank, and CEB Bank.

Among them, the annual interest rate for savings with a term of less than three years (including three-year fixed deposits) at state-owned banks has now been fully adjusted to "less than or equal to" 1.25%. This is even lower than the latest annualized yield of Yu'e Bao for seven days.

Attached image: Latest RMB deposit rate table from Bank of China

Responding to Policy Requirements

The interest rate cut by the major banks is clearly in response to the "package of financial policies to support market stability and expectations" mentioned at the press conference held by the State Council Information Office on May 7, which included "price-type policies" in the monetary policy package.

At that meeting, the central bank official mentioned that it would "lower policy interest rates and reduce the interest rates of structural monetary policy tools (that is, the interest rates at which the central bank provides relending to commercial banks), while also lowering the interest rates for provident fund loans."

Deposit Rates Generally Cut by More than 10 Basis Points

According to the performance of deposit rates from the aforementioned state-owned banks, the adjustment of savings rates this time is quite significant.

Taking Bank of China as an example, the listed interest rate for demand deposits has been cut by 5 basis points (each basis point means a change of 0.01%), while the interest rates for fixed-term deposits have been cut by 15 to 25 basis points, and the interest rates for fixed-term zero-balance deposits have also been cut by 15 to 25 basis points.

Among them, the listed interest rates for three-year and five-year fixed deposits have been notably reduced, both by 25 basis points.

In addition, the interest rate for agreed deposits has been cut by 10 basis points, the listed interest rate for one-day notice deposits has been cut by 10 basis points, and the interest rate for seven-day notice deposits has been cut by 15 basis points.

Lower than Money Market Fund Rates

After this round of rate adjustments, the interest rate for three-year fixed deposits at large state-owned banks has been reduced to a level lower than the latest seven-day annualized yield of Yu'e Bao.

On the web version of TianTian Fund, the seven-day annualized yield of money market funds is slightly higher, with recent high seven-day annualized yields (excluding obviously abnormal varieties) reaching over 2%.

Additionally, the "median" of over 900 money market funds is also at 1.37%, which is relatively competitive compared to the already reduced savings rates of major banks.

In the future, the momentum of "activating" deposits may be enhanced.

Bank Wealth Management Products May Become Popular

After a significant decline in deposit rates, bank wealth management products that are still maintaining a certain high level may also become popular.

According to observations from Zhitang, whether it is large banks that have already cut interest rates or banks that have not yet started to lower rates, the yields of their wealth management products have not shown a significant decline.

Taking Bank of Communications as an example, the annualized yield of its "Current Yield" wealth management product on the APP is currently 1.37%, which is higher than the 5-year savings rate of major banks.

Additionally, on the APP's "shelf," several closed-end wealth management products managed by Bank of Communications have an annualized yield ranging from 1.90% to 2.3%, which is also competitive compared to savings (see the image below).

Of course, unlike the "certainty" of savings yields, the yields of bank wealth management products may fluctuate to a certain extent, so investors should be more cautious.

Seize the "High Ground" of Structured Savings Rates

According to convention, adjustments to deposit rates are often initiated by state-owned large banks, followed by other joint-stock banks, urban commercial banks, and rural commercial banks.

If depositors have a willingness to save, they can actively seize the phase of "high ground" in deposit rates.

Bank savings deposit rates often vary, and among banks that have not yet initiated rate cuts or those that have already started to lower rates,

Jiangsu Bank, which has historically offered relatively "generous" savings rates, currently has a 3-year fixed deposit rate of 2.1%.

Nanjing Bank's 1-year, 3-year, and 5-year deposit rates are also 1.7%, 2.1%, and 1.85%, respectively, which are relatively attractive after another round of rate cuts is initiated.

Risk Warning and Disclaimer

The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial conditions, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at one's own risk