Recently, rural commercial banks in many places began a new wave of deposit interest rate cuts. Since entering May, agricultural and commercial banks in Shanxi, Guangdong, Inner Mongolia and other places have lowered deposit interest rates. The period covered a wide range of deposit product adjustments. The reduction was as high as 35 basis points. After the cuts, deposit interest rates for one-year, two-year, and three-year terms in many banks have basically entered the word “1.” The reason for this intensive wave of interest rate cuts by the Agricultural Commercial Bank is that industry insiders say that this round of interest rate cuts is mainly driven by a combination of factors such as pressure on net interest spreads, high debt costs, and regulatory orientation. First, asset-side earnings have declined. The continued decline in quoted interest rates in the loan market has led to a decline in loan interest rates, while deposit costs are highly rigid, and net interest spreads have narrowed to historic lows. Second, the debt structure is unbalanced. Agricultural and commercial banks are highly dependent on term deposits, account for a high proportion of long-term high-interest debt, and the cost pressure is significantly greater than that of major banks. Furthermore, regulation guides pressure on long-term and high-cost liabilities, encourages refined pricing, avoids disorderly competition, and promotes the optimization of debt structures.

Recently, rural commercial banks in many places began a new wave of deposit interest rate cuts. Since entering May, agricultural and commercial banks in Shanxi, Guangdong, Inner Mongolia and other places have lowered deposit interest rates. The period covered a wide range of deposit product adjustments. The reduction was as high as 35 basis points. After the cuts, deposit interest rates for one-year, two-year, and three-year terms in many banks have basically entered the word “1.” The reason for this intensive wave of interest rate cuts by the Agricultural Commercial Bank is that industry insiders say that this round of interest rate cuts is mainly driven by a combination of factors such as pressure on net interest spreads, high debt costs, and regulatory orientation. First, asset-side earnings have declined. The continued decline in quoted interest rates in the loan market has led to a decline in loan interest rates, while deposit costs are highly rigid, and net interest spreads have narrowed to historic lows. Second, the debt structure is unbalanced. Agricultural and commercial banks are highly dependent on term deposits, account for a high proportion of long-term high-interest debt, and the cost pressure is significantly greater than that of major banks. Furthermore, regulation guides pressure on long-term and high-cost liabilities, encourages refined pricing, avoids disorderly competition, and promotes the optimization of debt structures.