Xiamen Bank Co Ltd

Since August, multiple small and medium banks in Hubei, Guangdong and other regions have raised deposit rates by 10 to 33 basis points. Meanwhile, the four major state-owned banks—Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China, and China Construction Bank—along with several joint-stock banks, have relaunched five-year large certificates of deposit, with the highest annualized rate reaching 1.80 percent. Analysts point out that the deposit rate hikes by small and medium banks are a regional defensive move driven by periodic pressure to attract deposits, and do not signal a turning point in the industry's overall rate trend, nor are they directly linked to the big state banks' relaunch of large certificates of deposit. A research note from Kaiyuan Securities argues that the relaunch of five-year large certificates of deposit results from a confluence of factors on the institutional, supply, and demand sides, with all banks issuing them in limited quantities, reflecting an orderly progression rather than a full-scale liberalization. Taken together, these differentiated competitive moves may help stabilize deposit volumes in the short term, but will push up funding costs for small and medium banks, intensify pressure on narrowing net interest margins, and further highlight the profit divergence between large and small banks. In the medium to long term, this will force the banking industry to accelerate business transformation.