Some of China's biggest state lenders have cut deposit rates as they look to protect record-low profit margins just days after lowering lending rates as Beijing turns to policy easing to boost an ailing economy.

Major banks including Industrial & Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank have cut time deposit rates by 5 basis points to 20 basis points, according to statements released Thursday.

China's smaller regional lenders are expected to follow suit, with some already having cut deposit rates earlier this week.

The trims came shortly after banks lowered the benchmark lending rates they use to price the country's commercial loans, including mortgages, by 10 basis points on Monday. That followed the central bank's surprise cut of a key short-term policy rate as authorities step up efforts to achieve their annual economic growth target of around 5% after a sharper-than-expected slowdown in the second quarter.

Reducing deposit rates would help bolster the banking sector's slimming net profit margins, which plunged to a record low of 1.54% at the end of March, well below the 1.8% threshold authorities deem as safe.

Chinese banks are in a tough spot: households' reluctance to spend amid low confidence and uncertainty about the economy has resulted in built-up savings that have driven up lenders' overall liability costs. They're also dealing with bad loans from the beleaguered property sector that further erode their profitability, while simultaneously complying with Beijing's guidance to ease borrowing rates to help support the economy.


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(END) Dow Jones Newswires

07-24-24 2252ET