Some private banks raise medium- to long-term deposit rates, with 3-year rate up to 1.75%

Source: International Finance News

Several private banks have recently made quiet adjustments to their personal term deposit interest rates, according to reports.

Unlike the "short-term focus, long-term neglect" approach seen over the past two years, the latest round of adjustments by private banks has brought medium- and long-term deposits back into the spotlight. Some institutions have specifically raised interest rates on 3-year and 5-year fixed deposit products, with certain rates reaching the "2%" range. Multiple banks have also launched 5-year large-denomination certificates of deposit (CDs).

Industry experts suggest that other types of banks are likely to maintain a wait-and-see stance rather than follow suit in raising rates on medium- and long-term deposit products, as reducing long-term high-cost liabilities remains the overarching industry trend.

Return of Medium- and Long-Term Deposit Products

On September 18, reporters learned from WeBank customer service that the bank completed a round of interest rate adjustments on September 1. Specifically:

• 2-year fixed deposits: Lowered from 1.70% to 1.60%
• 3-year fixed deposits: Increased by 15 basis points (BP), from 1.60% to 1.75%

According to WeBank staff, the interest rate for its 2-year fixed deposit product has undergone multiple adjustments since the beginning of this year:

| Date | Rate | |------|------| | February 12 | 1.70% | | March 27 | Reduced to 1.60% | | April 20 | Returned to 1.70% |

Notably, compared with last year, WeBank's overall fixed deposit interest rates have risen significantly. The fixed deposit interest rate table displayed on WeBank's official website is still the version effective June 16, 2025. At that time, the maximum term for personal fixed deposit products was only three years.

Comparison of WeBank fixed deposit rates:

| Term | Previous Rate (June 16, 2025) | Current Rate | Change | |------|------|------|------| | 1-year | 1.40% | 1.50% | +10 BP | | 2-year | 1.50% | 1.60% | +10 BP | | 3-year | 1.50% | 1.75% | +25 BP |

WeBank now also offers 5-year fixed deposit products, but the interest rate exhibits a clear inversion compared with the 3-year term, standing at just 1.60%.

In November last year, reporters had noted that 5-year deposit products were generally withdrawn from sale by private banks. At that time, the maximum deposit terms offered by institutions including Jilin Yilian Bank, MYbank, Huarui Bank, and Xin'an Bank had all been reduced to two or three years. Currently, many private banks have reintroduced medium- and long-term deposits. For example:

• Huarui Bank now offers 5-year fixed deposit products, having raised the interest rate from 1.90% to 2.00% on June 30 — the highest among all its fixed deposit products.

Additionally, 5-year large-denomination CDs have gained considerable popularity. In August this year, Su Shang Bank successively launched three large-denomination CDs, including:

• A 5-year product available for subscription from August 24 to December 31
• Minimum investment: 200,000 yuan
• Annual interest rate: 1.85%

Compared with the 5-year large-denomination CD rates offered by state-owned and other major banks (1.55% or 1.60%), the advantage of being a "high-yield haven" remains evident.

Reducing Long-Term High-Cost Liabilities Remains the Trend

Data from the National Financial Regulatory Administration on key indicators of commercial banks shows that, as of the end of the second quarter this year:

• The industry's net interest margin slightly recovered to 1.41%
• The net interest margin of private banks rose by 1 basis point from the end of the first quarter to reach 3.63%, significantly exceeding the average level and notably higher than that of other categories of banks.

Data from the People's Bank of China indicates that, as of the end of August:

• The balance of RMB deposits reached 347.67 trillion yuan, a year-on-year increase of 7.7%
• During the first eight months, RMB deposits increased by 18.99 trillion yuan
• Household deposits grew by 6.99 trillion yuan

Liu Chengxiang, an analyst at Kaiyuan Securities, pointed out that in August:

• Personal fixed deposits at large banks increased by 433.9 billion yuan year-on-year
• Personal fixed deposits at small-to-medium-sized banks increased by 191.4 billion yuan year-on-year

Small-to-medium-sized banks reversed the trend of consecutive monthly year-on-year declines observed since July, achieving recovery-driven growth. Moreover, combined year-on-year increases in margin deposits at small-to-medium-sized banks exceeded 400 billion yuan between May and June, whereas margin deposits declined year-on-year in both July and August. This reflects a shift in their deposit strategy from corporate-oriented "invoice-based deposit gathering" toward price competition for more stable personal fixed deposits.

Shao Hui, Assistant Professor at Zhejiang University's International Business School (ZIBS), views the recent counter-trend rise in deposit rates by private banks and the relaunch of 5-year large-denomination CDs as primarily phased self-rescue efforts under liability-side pressure. Private banks have consistently faced high customer acquisition costs. After following the broader market trend of withdrawing medium- and long-term deposit products during the first half of the year amid falling interest rates, some institutions may have experienced notable deposit outflows, compelling them to raise prices to stabilize their core business base.

Looking ahead, Shao Hui believes that widespread follow-through by other institutions in raising deposit rates is unlikely.

"State-owned major banks and joint-stock banks currently enjoy relatively diversified funding sources and solid deposit bases, giving them little incentive to follow suit. While city commercial banks and rural commercial banks also face liability pressures, most are constrained by regional operations and regulatory requirements, preventing them from adjusting as flexibly as private banks. Therefore, this move by private banks appears to be an isolated case; other types of banks are likely to remain cautious and continue along the path of reducing long-term high-cost liabilities."

— Shao Hui, Assistant Professor, ZIBS, Zhejiang University