Summary of the Core Content in Plain Language
This news article discusses a phenomenon that all depositors have recently become acutely aware of: when depositing money in a bank for a fixed period, the interest rates have been cut nearly in half compared to three years ago. The highest interest rate for a three-year deposit is now only 1.6%, and for a five-year deposit, it’s 1.8%. Previously, the market predicted that in 2026, a large amount of high-interest deposits made in the early years would mature, and depositors, dissatisfied with the low interest rates, would withdraw their money to use it for buying houses, financial products, or funds—what is commonly referred to as a “massive shift of deposits.” However, according to the semi-annual reports of listed banks, over 90% of the maturing funds did not leave the banks; instead, depositors simply renewed their deposits at the lower interest rates, which saved the banks a significant amount of interest expenses and stabilized their profits, which were otherwise expected to decline. However, the banks no longer have such an easy opportunity to profit, and they will need to find ways to further reduce costs. As a result, the interest rates on fixed deposits available to ordinary depositors are likely to continue to decrease.
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Detailed Explanation in Five Dimensions
1. How much are you really losing by depositing money for a fixed period? 1,500 yuan less in interest per year on 100,000 yuan
Many people may not realize the impact of this. Let’s do the math: three years ago, if you deposited 100,000 yuan for a three-year fixed deposit, you would have earned an interest rate of 2.85%-3.15%, resulting in an annual interest income of 2,850-3,150 yuan, which is roughly enough to cover a family of three’s monthly food expenses. Now, when that same amount of money matures, you can only earn an interest rate of 1.55%-1.6%, resulting in an annual interest income of 1,550-1,600 yuan—a decrease of 1,300-1,500 yuan, or half of the previous amount. In other words, if you previously deposited 1 million yuan and earned more than 30,000 yuan in interest per year, you can now only earn around 16,000 yuan. The difficulty of relying on fixed deposit interest to cover living expenses has doubled, which is the most immediate feeling for all depositors.
2. The expected “massive shift of deposits” didn’t happen; 90% of the money remained in the banks
Almost all financial analyses predicted that when the high-interest deposits matured and the interest rates were cut in half, depositors would withdraw their money to spend it, buy houses, or invest in higher-yielding financial products. However, the semi-annual report data proves this prediction wrong: in the first half of this year, the total amount of personal fixed deposits at 42 listed banks increased by 4.78 trillion yuan, with the six major state-owned banks alone seeing an increase of 3.76 trillion yuan. The deposits at ICBC, CCB, and ABC each increased by more than 1 trillion yuan. Many banks publicly stated that the renewal rate of maturing deposits exceeded 90%, meaning that 90% of the maturing funds were renewed at the lower interest rates. Why do people prefer lower interest rates instead of moving their money elsewhere? Essentially, the risk tolerance of ordinary people has dropped to its lowest point: they are afraid of losing money on housing investments or stocks/funds, and starting a business is also risky. Although the returns from bank deposits are lower, the principal is 100% guaranteed. For most people seeking stability, “earning less” is better than “losing money,” so deposits are not being moved elsewhere.
3. Banks got a huge windfall: profits that were expected to decline were stabilized by the maturing of old deposits
In the past two years, banks have faced difficulties, as the interest rates on loans to businesses and mortgages have continued to fall, reducing the returns on the money they lend. This trend would have led to a decline in bank profits. However, the banks happened to benefit from the concentrated maturity of high-interest deposits made in the early years. Previously, banks had to pay depositors interest rates of 2.85%-3% or more; now, with renewed deposits at only around 1.5%, their costs have been halved. In the first half of this year, the six major state-owned banks’ total interest payments to depositors decreased by 13%-15%. For example, ICBC’s interest expenses alone decreased by nearly 4 billion yuan, which more than offset the decline in loan earnings, stabilizing their net profit margin (the difference between interest income and expenses), essentially a windfall.
4. Banks are now selectively accepting deposits: they don’t want high-interest deposits; they prefer “cost-effective” funds
Previously, banks competed to attract deposits, with those attracting the most deposits performing better. Now, the situation is reversed: banks are not interested in long-term high-interest deposits (three-year and five-year). Instead, they are eager to acquire two types of funds: one is the liquid working capital of businesses, which they can use with little interest cost (for example, 70% of new deposits at Bank of Communications in the first half of the year were from this category, significantly lowering the overall deposit cost). The other type is the cash held by ordinary depositors in mobile banking accounts, which also requires little interest. Banks are competing to acquire as much of this low-cost funds as possible, with different preferences among them. For instance, ABC’s deposit costs for individual customers (mostly middle-aged and elderly individuals seeking stability) were even lower than those for business deposits, with the cost of individual deposits reduced by 0.49 percentage points in the first half of the year, meaning banks saved 4,900 yuan in interest per year for every 1 million yuan deposited.
5. The future trend is clear: low interest rates will be the norm, and it will become increasingly difficult to earn a stable income from fixed deposits
The benefits of the high-interest deposit maturity period are coming to an end. The high-interest deposits that matured in the first half of the year accounted for more than 60% of the total for the year, and the remaining high-interest deposits in the second half will reduce the amount banks can save in interest. As a result, the pressure on bank profits will increase again. Banks will continue to look for ways to reduce deposit costs, and the number of high-interest deposit products available to ordinary people will decrease. It’s even possible that the three-year deposit interest rate could fall below 1.5% in the future. Additionally, the distribution of residents’ wealth will gradually diverge: younger, risk-tolerant individuals will move some of their money to funds and equity products, while middle-aged and elderly individuals seeking stability will continue to deposit their money in banks. However, it will be increasingly impossible to rely on the interest from a few hundred thousand yuan in deposits to cover daily expenses.