Recently, several private banks such as Xishang Bank and Xin'an Bank have successively announced the reduction of their deposit interest rates. At present, it is difficult to find medium and long-term deposit products with interest rates starting with the third letter in the market. Yang Haiping, a researcher at the Shanghai Institute of Finance and Law, told reporters that the main consideration for private banks to lower deposit interest rates this round is to cope with the downward trend of asset side interest rates, reduce deposit interest costs, and gradually adjust the asset liability ratio model. In the next stage, small and medium-sized banks, including private banks, will actively enhance the refinement of deposit interest rate pricing and implement more flexible and professional asset liability allocation strategies. Taking Xishang Bank as an example to alleviate the pressure of net interest margin, the bank has lowered the interest rate for fixed-term three-month deposits from 1.6% to 1.4% starting from February 24th; The one-year deposit interest rate has been lowered from 1.9% to 1.8%; The two-year deposit interest rate has been lowered from 2.5% to 2%; The three-year deposit interest rate has been lowered from 2.85% to 2.6%; The five-year deposit interest rate has been lowered from 2.6% to 2.5%. In addition to Xishang Bank, several private banks such as Xin'an Bank and Zhongguancun Bank have recently announced the reduction of deposit interest rates. As announced by Zhongguancun Bank, starting from February 26th, it will lower the two-year deposit interest rate for lump sum deposits from the current 2.4% to 2.2%. According to the observation of reporters, private banks have started to lower deposit interest rates since last year. The main reasons for private banks to lower deposit interest rates include changes in the market interest rate environment, the need to reduce capital costs, easing net interest margin pressure, regulatory guidance, and adjustments to business strategies Ye Yindan, a researcher at the Bank of China Research Institute, told reporters that since 2024, the overall market interest rates have shown a downward trend, and private banks have also lowered deposit interest rates to adapt to the market environment. In addition, private banks initially attracted deposits through high interest rates, resulting in higher capital costs. As their business gradually stabilizes, in order to optimize cost structure and enhance profitability, lowering deposit interest rates has become an inevitable choice. In the context of overall pressure on the net interest margin of the banking industry, private banks have also experienced a significant decline in their net interest margin. Lowering deposit interest rates can help alleviate this pressure. The main regulatory indicators for commercial banks in the fourth quarter of 2024 released by the State Administration of Financial Supervision and Administration show that the net interest margin of commercial banks in the fourth quarter of 2024 was 1.52%, a decrease of 0.01 percentage points compared to the previous quarter. Among them, the net interest margin reduction of urban commercial banks and private banks is higher than the industry average. At the same time, the net profit growth of small and medium-sized banks such as city commercial banks, private banks, and rural commercial banks has been under pressure throughout the year. How to deal with challenges Ye Yindan believes that for banks, lowering deposit interest rates can help reduce overall debt costs, enhance competitiveness, and improve operational stability. For depositors, a reduction in deposit interest rates may lower deposit returns, affect deposit willingness, and encourage customers to seek other investment channels. In 2025, it is expected that bank deposit interest rates will continue to show a downward trend. It is not ruled out that private banks may further lower deposit interest rates in the future According to Ye Yindan's analysis, from the perspective of pricing mechanism, the deposit interest rate is linked to ten-year treasury bond and one-year LPR. In combination with the tone of moderately loose monetary policy and the low running trend of ten-year treasury bond interest rate, the deposit interest rate is more likely to decline with the loan interest rate. In addition, as financial market competition intensifies, banks may gradually converge towards a reasonable range of deposit interest rates after weighing costs and benefits. Yang Haiping stated that in the face of the challenges brought by changes in interest rates, commercial banks should enhance their market research capabilities, actively promote the refinement and upgrading of pricing and cost management, and improve the flexibility of asset liability allocation strategies. In addition, we need to promote the transformation and optimization of strategic management methods, establish brand influence and moats based on precise positioning; Provide agile and high-quality services with a good user experience based on business innovation; Relying on distinctive value-added services to enhance customer stickiness. (New Society)