Several private banks buck trend by raising deposit rates, reintroducing 5-year fixed deposits

Since September, against the backdrop of a sustained decline in deposit rates across the banking sector, some banks have bucked the trend with rate increases.

WeBank raised its 3-year fixed deposit rate from 1.60% to 1.75%, a single increase of 15 basis points. Another bank raised its 1-year rate by 5 basis points to 1.70%, while its 5-year rate stands at 1.9%.

WeBank's last major rate adjustment occurred on April 29, 2025, when it cut rates for 5-year, 3-year, and 2-year lump-sum deposits from a uniform 2% to 1.6%. For the following 18 months, rates remained largely unchanged, with only short-term deposits of 1 year or less seeing fluctuations.

The latest increase focuses solely on 3-year deposits, leaving other maturities untouched. According to WeBank's app, current annual rates for lump-sum deposits are as follows:

• 5-year: 1.6%
• 3-year: 1.75%
• 2-year: 1.6%
• 1-year: 1.5%
• 6-month: 1.3%
• 3-month: 1.1%

Other Private Banks Reintroduce 5-Year Products

Several private banks have also brought back 5-year fixed deposit products. For example:

• One bank offers a 5-year rate of 1.8%
• Another offers the same 1.8% for 5-year deposits
• A third offers 1.85% for 5-year deposits (minimum deposit of 200,000 yuan)

Smaller Banks Also Acted Earlier

In May, Xi'an Gaoling Sunshine Village Bank raised its 1-year fixed deposit rate by 15 basis points to 1.60%. In August, Guangdong Wuhua Huimin Village Bank raised its 2-year and 3-year rates by 11 and 33 basis points, to 1.28% and 1.58%, respectively.

Analyst Perspectives

A senior analyst at Botong Consulting noted that most private banks have limited customer acquisition channels and rely heavily on online deposits. "To stabilize deposit scale and supplement stable liabilities, private banks have no choice but to moderately raise deposit rates to attract funds. This is the most direct means of online customer acquisition."

A researcher at China Postal Savings Bank attributed the rate increases to multiple factors, including phased deposit-gathering strategies, countering the "siphoning effect" of large banks, and differentiated liability management.

Not All Banks Are Raising Rates

MYbank recently cut its 1-year and 2-year fixed deposit rates by 5 and 10 basis points, to 1.6% and 1.5%, respectively. Keshang Bank reduced its 3-month and 6-month rates by 10 basis points each, to 1.1% and 1.4%, while keeping the 1-year rate unchanged at 1.7%.

Industry Outlook

Industry insiders believe the current adjustments are phased and structural. Constrained by narrowing net interest margins, reducing high-cost liabilities remains the mainstream direction for the banking sector. A moderate downward trend in deposit rates is still the medium- to long-term outlook.

This year's deposit market has shifted from the previous pattern of "large banks cutting rates first, small banks following gradually" to a more differentiated liability management approach. The "dual-track" divergence in deposit rates is intensifying:

• Most banks continue to reduce long-term deposits and delist high-cost products
• A small number of banks are raising rates on specific products at specific times

Ai Yawen, a senior analyst at the Digital Technology Research Institute of Rong360, noted that the divergence among banks is becoming more pronounced. "This differentiated pricing reflects objective differences in liability pressure, liquidity reserves, and customer management strategies across institutions."

(Note: This article does not constitute investment advice.)

Source: China Business News, compiled from Daily Economic News, Yicai, 21st Century Business Herald, etc. [Source: China Business News]