Several joint-stock commercial banks have followed suit in reducing deposit interest rates, with a general 25 basis point reduction in 3-year fixed-term deposits. What are the noteworthy points to pay attention to?

Breaking news from Every Economy AI: On December 25th, it was reported that following last Saturday’s adjustments by major state-owned banks and China Merchants Bank, several joint-stock commercial banks, including CITIC Bank, Ping An Bank, Everbright Bank, Zhejiang Merchants Bank, China Guangfa Bank, and Minsheng Bank, have also revised their benchmark interest rates. Specifically, the 1-year fixed-term deposit rate has been lowered by 10 basis points, the 2-year fixed-term deposit rate has been reduced by 20 basis points, and the 3-year fixed-term deposit rate has been generally reduced by 25 basis points (Everbright Bank reduced it by 30 basis points). Additionally, the 5-year fixed-term deposit rate has been generally lowered by 25 basis points. Furthermore, several banks, including China Merchants Bank and Minsheng Bank, have further lowered interest rates on specialized deposit products. For example, China Merchants Bank has reduced the 3-year fixed-term deposit rate from the previous 2.6% to 2.35%, while Minsheng Bank has reduced the 3-year fixed-term deposit rate from 2.85% to 2.6%. (Source: Shell Finance) Multiple joint-stock commercial banks are following suit in reducing deposit interest rates! 3-year fixed-term rates generally lowered by 25 basis points | Economic Daily

Last time, we analyzed the background of the long-term decline in interest rates. This time, we can take a look at the transmission mechanism.

What does it signal when deposit rates are lowered for the third time this year, as announced by China Construction Bank, Industrial and Commercial Bank of China, Agricultural Bank of China, and Bank of Communications?

Credit is the cornerstone of the modern financial system. The higher the credit rating, the lower the cost of funds for financing. This applies not only to businesses and individuals applying for loans but also to banks. Large financial institutions often have more solid credit, a widespread branch network, and generally adhere to stricter standards, which naturally enhances their ability to attract deposits. From a supply-demand perspective, money primarily flows to these large banks. Even if their services are only so-so, if not for the progress of mobile payment platforms and the like, our monopolistic financial system with a low inclination for spontaneous reform might still be following consumption habits and service quality from the last century. It’s important to note that the transaction volume of non-bank payment platforms has already exceeded 40 trillion RMB.

Returning to the question at hand, when it comes to attracting deposits and extending loans, how can small and medium-sized banks survive? Naturally, they need distinctive business models or higher interest rates, such as focusing on county-level town banks, various types of credit cooperatives, and so on. Alternatively, they can offer slightly higher deposit rates. Several troubled rural commercial banks in recent years have been known for offering deposit rates higher than those of the big four banks. This is the survival strategy for small and medium-sized financial institutions. What else can they use to compete with large banks in terms of deposit attraction? It’s primarily interest rates.

So, in the past, when our economy adjusted interest rates, it usually started with large banks, followed by medium-sized joint-stock banks, and finally reached rural commercial banks and town banks, and this has been the general pattern. This time, the adjustment is happening even more rapidly. In theory, there are deposit performance requirements at the end of the year, which often necessitate maintaining higher interest rates. However, this adjustment is indeed quite swift. Additionally, various types of small and medium-sized banks are likely to follow suit quickly. This may also be related to the regulatory requirements of recent years, which have imposed limits similar to interbank competition on various types of deposits. Once the large banks reduce rates, smaller banks will also follow suit.

It is anticipated that there will be another wave of so-called “deposit special forces” looking for high-interest regional banks to deposit their money by the end of the year. Of course, this choice may not necessarily serve as a reference, as we are uncertain about the extent to which real estate risks are spreading, especially for some local banks that are willing to offer high interest rates. In principle, there is deposit insurance, but it mainly depends on individual choices. In principle, diversification of deposits is better, especially when the interest rate is several tens of basis points. Sometimes, it may not be worth taking risks.

Around one year, deposit interest rates have been adjusted around four times, which must be quite frustrating for those who like to save money.

And in about three years, the interest rate for large deposits has dropped from around 4% to the current 2%, and it’s on the verge of collapsing.

In general, the six major banks make the initial adjustments, followed by the joint-stock banks, and finally, various local and small banks follow suit.

During the Chinese New Year, many small and medium-sized banks may not follow the rate cuts as aggressively to attract deposits, so there may still be some relatively higher deposit interest rates.

After the Chinese New Year, they will usually adjust their rates in line with the market trend. However, it’s not worth depositing money in small and medium-sized banks for slightly higher interest rates.

The rapid decline in deposit interest rates indicates that there are fewer and fewer people investing and consuming, and everyone is trying to rest and recuperate, avoiding debt. This leads to banks not being able to offer higher interest rates.

When interest rates are declining rapidly, the value of cash is slowly increasing.

When interest rates are rising rapidly, the value of cash may be decreasing continuously because there are few opportunities worth borrowing money for investment or consumption.

This indicates that overall, making money is becoming more difficult, and many things are actually decreasing in price. The value of cash does not decrease, and if you consider other investments like real estate, it may even appreciate.

For example, if you had 1 million RMB in savings two years ago and didn’t buy a house, even though your interest income is less, the housing prices have decreased by 100,000 RMB. In reality, your 1 million RMB still has decent purchasing power.

When property prices are rapidly increasing, even though you get high interest on your savings, property prices increase faster. If you focus on interest income and save money, you will incur losses in other areas. Your interest income cannot compete with the appreciation in property prices. This is when cash depreciates the most.

It’s similar to this line of thinking, not necessarily just real estate, but overall, when deposit interest rates keep decreasing, it means that the prices of many big things are also dropping.

In this environment, people prefer to save money, and they recognize the value of cash. Banks accumulate a lot of deposits, but there are not many people taking out loans. Banks can only keep lowering interest rates to stimulate consumption and reduce the cost of interest, but they can’t stop people from wanting to save money because saving money is still worthwhile.

If the future stock market is particularly good, or if property prices rise again, or if there are particularly good money-making channels,

Then borrowing will become more active again, and banks will experience a large outflow of deposits.

At that time, people will invest their money elsewhere and buy other things.

During such times, cash is prone to depreciation because you are not participating in these opportunities. Others are making money in these opportunities. Other people’s money is earning more than the interest rate, and overall inflation will become more severe, reducing the purchasing power of money.

Because there’s a large amount of capital making money, it will be like this.

But now there are not many investment opportunities, and property prices are unlikely to continue to rise significantly.

So, in the future, the purchasing power of cash, overall, will be stable and slowly increasing.

Don’t be fooled by the decreasing deposit interest rates; the value of money is actually increasing.

This is finance; it’s quite magical. It seems like when deposit interest rates are high, everyone should deposit money, but the better use of money is not in deposits but elsewhere.

When deposit interest rates appear to be decreasing, people may feel like they are losing out by not saving money, but in reality, it’s when the value of money is increasing.

Many things are changing; inflation and purchasing power do not always decrease. Sometimes, or at certain stages, they are increasing.

If in the future, new investment opportunities appear, and there are specific directions suitable for capital investment, then you will definitely see deposit interest rates increasing again. Otherwise, it will be a cash-dominated environment.

Even large capital would prefer to sell assets to obtain cash rather than using cash to purchase assets.

You can also think of it as stocks becoming cheaper, property prices becoming cheaper, and interest rates not mattering as long as you keep your money.

Being passive is equivalent to being more valuable. You can exchange your money for more stocks and bigger houses.

This is how to think about the teeter-totter of the value of assets and cash, the changes in deposit interest rates, and the changes in asset values, property prices, and cash values.

When the value of assets is slowly decreasing, money becomes more valuable. It’s not about not saving money because interest rates are low, but because money can buy more of other assets.

For big capital, this is the direction they’re looking at. It’s not just about considering deposit interest rates; that’s small change.

During a bull market in the stock market, or when property prices can still increase significantly, your money will become less valuable. Even if you get a little more interest, you are still losing out because you’re not keeping pace with the mainstream capital appreciation.

When others have more money, it also leads to a greater increase in prices, and your interest income cannot cover that. Essentially, your money is depreciating.

Right now, because there are no such opportunities, saving money is crucial.

The future depends on the capital market and property market trends.

If deposit interest rates keep decreasing, it means that large capital still hasn’t found a better option than saving money. In that case, the value of cash will continue to grow, and it’s definitely worth saving money.

Perhaps many friends think that the bank’s reduction of deposit interest rates is to promote consumption and discourage savings.

From a macro policy perspective, this does have that effect.

But when it comes to the specific bank level, the reduction of deposit interest rates doesn’t have such a grand narrative.

The sole purpose of banks lowering deposit interest rates is this: if loan interest rates are lowered and deposit interest rates are not, the interest rate spread narrows, and banks cannot make a profit.

You see, your deposits are liabilities for the bank, and it has to pay you interest.

Only your loans are assets for the bank because you have to pay interest to the bank.

Unfortunately, according to our current system, the bank can set its loan interest rates as it pleases, even though it has changed from the benchmark interest rate to the LPR. In practice, the central bank still leads.

So, when the central bank wants to ease monetary policy, it will lead to a reduction in the LPR.

Then the banks have no choice but to follow suit and lower deposit interest rates.

The latest LPR has remained unchanged, so deposit interest rates should not decrease in the short term.

If the economy does not improve, and the LPR continues to decline, deposit interest rates will soon follow suit.

This round of deposit interest rate cuts is already a done deal. What remains uncertain is whether this deposit rate cut will trigger a reduction in loan interest rates.

If the reduction in deposit interest rates is a prelude to a reduction in loan interest rates, it may not necessarily be a bad thing for everyone. After all, with lower loan interest rates, the monthly mortgage payments will also decrease, which can offset the loss from the reduction in deposit interest rates.

If the rate cut is only for deposit interest rates to ensure the stability of bank interest rate spreads, it may not be as friendly to the average person. Because there’s no good place for money to go, everyone prefers to deposit it. When people are inclined to deposit, no matter how much the interest rate is lowered, they won’t withdraw it, so the rate cut becomes even bolder. This is a detriment to the interests of depositors.

Even if it’s the first scenario, where deposit and loan interest rates are simultaneously reduced, it will still result in a structural redistribution. While there are quite a few people with mortgages, they are still a minority compared to depositors. Simultaneous interest rate reductions have limited overall impact, but for those who only have deposits and no loans, it’s still not very favorable.

Especially for many migrant worker groups, who earn money working in cities, they are even afraid to invest in bank financial products. They only trust deposits and continue to save money in bank fixed-term deposits year after year.

Seeing that bank fixed-term deposit interest rates are repeatedly lowered, it’s a kind of devaluation of their wealth. The key is that they only have the option of depositing.

Considering the current situation, I personally believe that the high probability of reducing deposit interest rates is a precursor to reducing LPR loan interest rates in January. The economy is still unstable, and monetary policy needs to be activated. It’s highly likely that there will be further reductions in reserve requirements and interest rates in 2024.

From the perspective of policy acting early and benefiting early, it’s better to lower interest rates sooner rather than later if it’s necessary. Therefore, a rate cut on January 20th is a high probability event.

For regular depositors, they will have to endure 1-2 more interest rate cuts in 2024. It may be a good idea to review the current fixed-term deposit products and choose banks with higher interest rates. Save as much as you can.

With the upcoming new round of deposit rate cuts, a 3-year deposit of 200,000 yuan will result in 1,800 yuan less in interest. What impact will this have?

2022 and 2023 have been a nightmare for the investment and financial market, opening the gates of hell. On one hand, there were fund losses, and now we have private equity fund managers fleeing. Even if you opt for low-risk bank financial products, there’s still a risk of funds being locked and unable to be redeemed.

Even if you haven’t stepped on a landmine, after consecutive interest rate cuts in the market, you will find that the returns on low-risk financial products are getting lower and lower. In the chart below, I have compiled the trend of the average annualized returns on bank financial products. In 2021, the average return rate in the market was still above 4%, but now it has dropped to as low as 1.65%. You should note that the handling fees for most bank financial products range from 1% to 1.5%. With an average return rate of only 1.65%, you won’t make much profit; the banks will take it all!

For many bank financial product investors, capital preservation is their top priority, especially at the end of the year when financial product losses are most likely to occur.

For instance, in December of the previous year, out of 33,568 non-principal-guaranteed bank financial products that were still in existence, 16,858 experienced net value declines, accounting for over 50%.

The products that incurred losses were mainly those with R1 and R2 risk ratings. Among them, there were only 11 products with the lowest risk rating of R1, and 11,194 with the relatively low-risk rating of R2. Even the traditionally safest R1 and R2 risk products lost almost half a year’s cumulative returns in just over ten days.

Therefore, finding a safe way of investing is absolutely crucial at the end of the year. I have tried many investment channels, and in terms of low risk and high returns, reverse repo of government bonds is undoubtedly a godsend in the current financial market.

For instance, if you buy a 28-day government bond reverse repo now, the annualized yield is 3.1%. Isn’t this outperforming bank financial products? Moreover, from a safety perspective, government bonds are even safer than bank deposits. Under the same level of safety and liquidity, government bond reverse repo is definitely a financial management tool!

Government bond reverse repo has four core advantages:

  1. Safety: The market’s only R0 level risk product.

  2. Low costs: The fees for government bond reverse repo are quite low compared to buying mutual funds or bank financial products.

  3. High yields: It offers higher returns compared to bank deposits.

  4. Convenience: You only need a stock trading account to make purchases.

In conclusion, if you are looking for a safe and profitable investment option, government bond reverse repo is the way to go.

The adjustment of deposit rates follows quickly, and there is no need for extensive symposiums. However, the intensity of implementing relevant measures on the part of banks is lagging behind.

1 Review of Symposiums

On August 22, China Construction Bank held a symposium on “Financial Support for High-Quality Development of Private Economy” in Shanghai. During the event, the bank introduced the “Ten Actions” to comprehensively enhance financial services and support for the private economy from ten aspects, including “firm service philosophy” and “boosting market confidence.”

On November 22, it was reported that CMB had held a symposium with more than 20 representative real estate companies. The bank stated that it would adopt comprehensive measures from both the supply and demand sides of the real estate market. Following that, China Construction Bank held a symposium to support reasonable financing needs of real estate enterprises, with six real estate companies including Longfor, Vanke, Country Garden, Binjiang, Midea Properties, and Dahua participating in the symposium.

On November 27, China Construction Bank held another symposium in Shanghai with some real estate companies. During the symposium, the bank exchanged ideas with representatives of the participating real estate companies and planned to further support their reasonable financing needs. It is understood that representatives from 15 real estate companies, including Vanke, Greenland, Longfor, Midea Properties, Country Garden, Evergrande, SOHO China, Excellence Group, Lujiazui Group, Renheng Real Estate, Dahua Group, Shanghai Pudong Group, Binjiang Group, New Hope Real Estate, and Weixing Group, attended the event.

Meetings were held with great fanfare, but there has been no subsequent news on whether these initiatives have been implemented. Perhaps there have been developments, but I won’t speculate here.

2 The Speed of Lowering Deposit Rates

The speed of lowering deposit rates is evident to everyone.

On the same day as the rumor that “Anhui Xin’an Bank’s deposit rate reached as high as 6%” circulated, news of major banks lowering deposit rates came out not long after. Then, in a matter of days, these joint-stock banks also announced their decisions to lower deposit rates.

Banks must have exceeded their deposit targets; otherwise, they wouldn’t release this news at this time. Traditional bank efforts to attract deposits have shifted due to changes in the economic situation.

3 The Predicament of Banks

Now, banks are no longer worried about deposits but are concerned about loan performance.

On one hand, it is difficult to implement financial support measures for private enterprises, as previous symposiums and white lists have yielded no results. Banks are reluctant to support loans if they fear these loans might become non-performing and they might be held responsible for unrecoverable debts.

On the other hand, there are fewer people seeking loans, as many are now saving their money instead. This has resulted in a reduced number of loan applicants.

For banks to meet their loan targets, reducing deposit interest rates may be a strategy to indirectly attract loan customers and enhance financial support.

This assertion remains consistent.

While many are complaining about the burden of housing loans and hoping for interest rate cuts this year, the 5-year and longer-term Loan Prime Rate (LPR) only hesitantly reduced by 10 basis points in June 2023.

On the other hand, deposit rates are a different story, plummeting drastically. Deposit rates have been cut three times this year, and the speed of these reductions is astonishing. Now, the 3-year deposit rate has officially entered the “1” era, standing at only 1.95%, dropping a significant 65 basis points this year. The 5-year deposit rate also experienced a sharp decrease of 65 basis points, currently barely reaching 2%.

Some might think that lowering deposit rates is to create room for lowering LPR, but I advise you to think again. If LPR is lowered next year, deposit rates will only decrease even faster, as demonstrated this year.

The call for a reduction in LPR in December was high this year, but it didn’t happen. The reason is simple.

Many people’s mortgage rates are adjusted based on the LPR announced on January 1st each year. If it’s reduced in December, everyone benefits. But if it’s postponed by one or two months, it means paying a higher mortgage rate for an additional year.

After all, middle-class housing loans are indeed banks' high-quality assets, much more reliable than business loans nowadays.

As for those who claim that lowering deposit rates stimulates consumption, I am truly speechless.

Lowering LPR to boost consumption, I can understand because it can reduce the pressure of housing loans.

But with lower deposit rates, will people consider buying stocks, funds, houses, and increasing consumption, or will they prioritize paying off their loans early?

I’ve answered a similar question before: why has this year’s CPI remained negative, and the annual Loan Prime Rate (LPR) has only been reduced once by just 0.1%?

A crucial reason for this is that the bank interest margin is too narrow.

The net interest margin of the four major banks this year is approximately around 1.7%, with smaller banks possibly a bit higher. But what about the previous years? Let’s take Industrial and Commercial Bank of China (ICBC) as an example; their net interest margin used to be mostly above 2%.

Generally, when overall interest rates are high, the interest margin tends to be higher, while when overall interest rates are low, the margin space gets compressed.

However, due to the marketization of our interest rates, the marketization of deposit rates began as early as 2004 but didn’t fully float until 2012. Similarly, the full marketization of loan rates began in 2013, with the real float happening in 2015, and the implementation of LPR occurred in 2019. So, during the period of rising interest rates, although deposit rates were more flexible, the decline in the interest margin was not significant. In recent years of macroeconomic downturn, as overall interest rates have fallen, the pressure on bank interest margins has become very evident.

Apart from the differences in the client base between large and small banks, large banks usually come with certain political tasks, such as interest-free loans, which tend to make the overall interest margin of large banks smaller. So, despite the apparent marketization of deposit rates, when significant moves are made, there are often unwritten rules that allow the four major banks to take the lead. In a way, with this kind of guidance, joint-stock banks and some regional small banks are also willing to follow suit.

In general, the monetary policy space we have now is much smaller than fiscal policy, and monetary policy is also more likely to have a widespread impact. For example, aside from affecting bank interest margins, a rate cut can also affect exchange rates in the short term. Therefore, when implementing loose monetary policy adjustments, everything needs to be in place to address possible adverse factors. In other words, all of this is paving the way for the implementation of loose monetary policy. Of course, on the surface, we have a prudent monetary policy, which means that during the process of loosening, we need to be cautious.

So, it’s highly likely that in the next two to three months, the LPR will follow a downward adjustment.

  1. The use of various tools such as reserve ratio cuts ensures that funds flow into the market, ensuring a stable and continuous money supply during an economic downturn, helping individuals and the economy weather difficult times.

  2. Lowering loan interest rates reduces the existing burden on residents and businesses while attempting to expand their willingness to use money, whether it’s for investment, consumption, or expanding production.

  3. However, lowering loan interest rates clearly impacts the profitability of banks. Therefore, reducing the interest margin of banks is necessary to benefit society, while also maintaining a reasonable interest margin space to sustain the profitability of banks. The profitability of banks is not measured against your salary but rather against international peers. If China’s banking industry cannot compete with foreign banks, it is certainly not a good sign.

  4. Interest rates are not simply about “adjusting expectations” as many might think. Instead, the central bank should, through comprehensive information gathering, bring interest rates closer to or align them with the central rates in the market. This ensures that interest rate policies match the level of market funds utilization.

  5. Of course, it is also crucial that we are indeed building an internal circulation. Internal circulation is also the key to breaking through in China’s future economy. I have always believed that we should not simply characterize the U.S. as high consumption with a population of 300 million while characterizing China as non-consuming with a population of 1.4 billion. In reality, promoting consumption instead of just real estate investment is often beneficial for consumers, the nation, and the economy. Encouraging people to consume is an important measure to revitalize the domestic economy and may even be one of the necessary measures for the future. Lowering interest rates at this time helps boost the willingness to consume.

As someone with negative savings, I am only concerned about whether the 5-year LPR will be lowered or not.

December 25th, it was learned that many joint-stock banks, including China CITIC Bank, Ping An Bank, China Everbright Bank, Bank of Communications, Guangdong Development Bank, and China Minsheng Bank, have adjusted their benchmark interest rates. On the same day, several banks, including China Merchants Bank and China Minsheng Bank, further lowered the interest rates on specialty deposits and other deposit products.

Last Friday, the six major state-owned banks and China Merchants Bank took the lead in adjusting the deposit benchmark interest rates and the interest rates on various deposit products, kicking off a new round of deposit rate cuts. Many joint-stock banks informed wealth management clients last Friday that they would start to lower deposit interest rates on Monday.

Wang Yifeng, chief analyst of the financial industry at Everbright Securities, said that this round of deposit rate cuts covers a wider range, with lower interest rates for all maturities except for demand deposits. Due to the continued pressure on net interest margins for banks, lowering deposit interest rates will help enhance the sustainability of bank operations. Currently, the overall exchange rate is stable, and the “New Year credit boom” is approaching, so it is advisable to lower deposit rates sooner rather than later.

Joint-stock banks followed suit in lowering the interest rates on 3-year fixed-term deposits, with a general decrease of 25 basis points

On December 25th, several joint-stock banks updated their latest benchmark deposit interest rates on their official websites. Among them, the 1-year fixed-term deposit interest rates (regular deposits) of China CITIC Bank, Ping An Bank, China Everbright Bank, Bank of Communications, Guangdong Development Bank, and China Minsheng Bank were generally lowered by 10 basis points to 1.65%.

The 2-year fixed-term deposit interest rates of these banks were generally reduced by 20 basis points, with China CITIC Bank lowering to 1.70%, China Minsheng Bank lowering to 1.75%, China Everbright Bank and Guangdong Development Bank lowering to 1.80%, and Ping An Bank lowering to 1.90%.

The 3-year fixed-term deposit interest rates were generally reduced by 25 to 30 basis points to 2%, with Bank of Communications lowering to 2.25%. The 5-year fixed-term deposit interest rates were generally reduced by 20 to 25 basis points to 2.05%, with Bank of Communications lowering to 2.30%.

“After the interest rate on deposits by state-owned banks decreased last week, our bank notified customers that deposit rates would be lowered.” A customer manager from a joint-stock bank told Beike Finance that starting from this Monday, the bank adjusted the deposit rates for terms of 1 year or less, 2 years, 3 years, and 5 years by 10 basis points, 0.2 basis points, 0.25 basis points, and 0.25 basis points, respectively. Among them, the highest interest rate for 3-year fixed-term deposits was lowered from the previous 2.85% to 2.60%.

Another customer manager from a joint-stock bank said that after the deposit interest rate was lowered, although the highest rate that the bank could apply for was still 2.65%, the threshold had increased, and the minimum deposit amount required was 500,000 yuan; at the same time, the quota had been reduced compared to before.

Lowering deposit rates ensures the stable development of the banking industry

Choosing to lower deposit rates at the end of the year, Wang Yifeng believes that, on the one hand, the overseas constraints on monetary policy have weakened, and the concentrated release of foreign exchange demand by exporters at the end of the year has led to overall stability in the RMB exchange rate. Since November, the gradual end of the Federal Reserve’s interest rate hike cycle, coupled with the strengthening of the “exchange rate stability” signal, has continued to ease the depreciation pressure on the RMB. This has weakened the constraints on domestic monetary policy, and increased the freedom of market interest rates. On the other hand, at the beginning of next year, the concentrated repricing of existing loans will cause significant pressure on banks' net interest margins, so it is advisable to lower deposit rates sooner rather than later.

“Under the simultaneous squeeze of both sides of the balance sheet, the pressure on narrowing bank interest rate spreads in 2024 is still great, and it is necessary to adjust the cost of liabilities in a timely manner.” Wang Yifeng further pointed out that the asymmetric reduction of deposit rates, the obvious downward adjustment of long-term interest rates, helps to alleviate the trend of deposit maturities and long-termization, promotes the activation of funds, and improves the efficiency of monetary input and output. At the same time, lowering deposit rates helps revitalize the stock of financial resources, compresses the arbitrage space for broad money, and enhances the overall efficiency of capital allocation.

According to calculations by China International Capital Corporation, based on fixed-term deposits of about 150 trillion yuan, a 15 basis point reduction in interest rates would save banks 225 billion yuan (annualized) in interest expenses, equivalent to the impact of a reduction in mortgage interest rates.

Li Yifan, an analyst at the China Banking Research Institute, also believes that the adjustment of deposit benchmark interest rates can ease the pressure on bank interest rate spreads, and in the future, banks will further optimize asset and liability management to ensure stable and sound development.

“In 2024, there may still be moderate downward space for LPR.” Li Yifan said that the adjustment of deposit benchmark interest rates can also provide more room for banks to lower financing costs for the real economy in weak areas, key areas, and emerging fields, and further enhance their ability to serve the real economy. As the most important source of funds for banks, deposits have a profound impact on bank costs and asset-liability management. In the future, banks must continue to strengthen their active liability management capabilities, grasp the relationship between the scale, pricing, and efficiency of deposit business, and ensure the stable and sound development of their operations.

In addition, Li Yifan also pointed out that considering the characteristics of “large banks taking the lead and other banks following” in the adjustment of deposit benchmark interest rates, after the adjustment by state-owned large banks, it is expected that other banks will follow suit in the future.

Coincidentally, as the year-end approaches and everyone is preparing to return home for the New Year, major banks have once again lowered interest rates.

In fact, this is to prevent everyone from rushing to the banks to deposit money as usual.

(Images source from the internet)

Many friends may have questions:

With this trend, will deposit returns continue to decline in the future?

If you want good long-term returns, what should you do besides depositing money in banks?

Today, I will discuss this topic with everyone.

I. Will the downward trend in deposit rates become irreversible?

In fact, not only this year, since the second half of last year, major national banks such as ABC, ICBC, CCB, BOC, and CMB have successively lowered various types of deposit rates,

Most banks' 3-year and 5-year benchmark rates have fallen below 3%.

This year, some small and medium-sized banks and a few national banks have followed in the footsteps of the major banks.

Interest rate cuts are not a new phenomenon. Taking Bank of China as an example, it has adjusted its benchmark deposit interest rates nine times in the past 11 years,

Among them, its 3-year and 5-year fixed deposit rates have been declining year after year:

To some extent, this indicates that the downward trend in deposit rates has become a major trend.

There are mainly two factors affecting interest rate cuts:

1. Continuous Increase in RMB Deposits

Let’s look at the RMB deposit data for the past three years:

*In 2021, China’s total RMB deposits amounted to 23.225 trillion yuan, an increase of 1.968 trillion yuan over the previous year. *In 2022, China’s total RMB deposits increased by 2.626 billion yuan over the previous year. *In April of this year, the central bank released relevant financial data, showing that RMB deposits increased by 1.539 trillion yuan in the first quarter of 2023, an increase of 0.454 trillion yuan year-on-year.

For banks, deposits are essentially liabilities.

Banks take the money deposited by businesses and depositors, invest it, lend it, and earn a certain income, deducting the interest they have to pay, and that is the final profit.

But due to economic conditions, declining investment returns, and fewer people willing to borrow, the overall income of banks will decrease correspondingly, while the interest they have to pay remains unchanged, effectively increasing their costs.

Therefore, banks will naturally lower interest rates to reduce everyone’s desire to deposit money.

In addition, national policies also have a significant impact.

2. The Country Needs to Stimulate Consumption

The CPI and PPI data released by the National Bureau of Statistics in March of this year clearly show that people’s willingness to consume is weak:

CPIincreased by 0.7% year-on-year, mostly due to food price increases, but it decreased by 0.3% month-on-month, indicating negative growth,
PPIfell by 2.5% year-on-year, remaining flat month-on-month.

In simple terms, CPI is the Consumer Price Index, which rises when there is strong demand for consumption and prices go up.

So, if no one is buying, CPI will go down or even show negative growth.

PPI, on the other hand, measures the degree of price changes of goods at the factory,

In simple terms, a decrease in this index means that prices of related goods in the production sector are also falling, which is caused by overproduction and low consumption demand.

If this situation continues, prices may stagnate, and social productivity may decline, leading to a significant increase in unemployment rates.

So, stimulating consumption is necessary overall.

Among them, lowering deposit and loan interest rates is an effective means.

When savings returns are reduced, loan interest rates are also lowered, and people’s willingness to consume will increase accordingly.

From various perspectives, it is highly likely that interest rates will continue to decline in the future, and deposit returns will become lower—interest rate risk will persist.

For some people, it is impossible to resist interest rate risks with assets accumulated by themselves, so locking in long-term returns is necessary.

How can you lock in long-term interest rates?

II. How can you lock in long-term interest rates?

Currently, there are three types of products that can lock in interest rates: bank fixed deposits, government bonds, and savings insurance.

In addition to bank fixed deposits, the interest rates of the other two have not been “spared” either.

For example, 3-year savings-type government bonds used to have interest rates generally above 5% ten years ago, but now they are only slightly over 3%.

As for savings insurance, it has a fixed yield and is not affected by the market, but it has a predetermined interest rate when the product is developed, which can be understood as an upper limit on the yield.

However, the predetermined interest rate of savings insurance has also been adjusted from 3.5% to 3% this year.

After discussing the return situation, let’s look at their holding periods.

Among the three types of products, bank fixed deposits and savings-type government bonds are medium-term products, such as 3, 5, and 10-year options for savings-type government bonds.

If you want to lock in longer-term returns, savings insurance may be a more suitable choice.

In savings insurance, there are annuity insurance and increasing life insurance, both of which can lock in long-term returns, and the money invested will increase at a fixed interest rate, unaffected by the market.

A more common type of annuity insurance is pure retirement annuity insurance, where you invest a sum of money upfront, and as time goes on, it appreciates. At the agreed age, such as 60, you can receive a sum of money every year, as long as you live.

Increasing lifetime insurance works in a similar way, increasing in value over time, but it does not have fixed requirements for the age and amount of withdrawals, offering more flexibility.

As life insurance policies, both increasing lifetime insurance and annuity insurance are protected by the “Insurance Law” and regulated and supervised, with a safety level similar to that of government bonds.

Moreover, they have two major advantages: first, nearly 3% compound interest; second, locking in interest rates, unaffected by the market.

For example,

If you invest 200,000 yuan in a certain type of increasing lifetime insurance, you can get 550,000 yuan after 30 years;
If you use the same 200,000 yuan to buy government bonds, after the same period of time, you can only get 477,000 yuan, with a difference of nearly 70,000 yuan in returns.

However, it is important to note that the returns on such products may take a long time to materialize, and there is a risk of loss if you withdraw them in the short term.

Therefore, if you need the money within three to five years, it is recommended not to invest in these products.

In addition

From a policy perspective, the reduction in deposit interest rates

Firstly, it aims to encourage residents to save less and transform towards consumption and investment to boost overall economic demand.

Secondly, it aims to protect the net interest margin of banks.

This year, there has been a reduction in the LPR interest rate, leading to a decrease in the interest rates for medium and long-term loans for residents, impacting the income of banks.

However, costs (i.e., deposit interest rates) have not been lowered, putting pressure on the net interest margin of banks.

Thirdly, as anticipated by many market institutions, the reduction in deposit interest rates may pave the way for future adjustments in loan interest rates, creating space for a comprehensive easing of monetary policy.

After all, one of the factors hindering the reduction in rates is the pressure on the net interest margin of banks, which is somewhat relieved by the policy.

But currently, the expectations of microeconomic entities are not favorable, the financial markets have been sluggish, and in uncertain conditions, it is uncertain whether the act of saving money will change with a 25BP reduction.

Good news is certain. In this round of deposit rate cuts, it can improve the bank’s interest margin by 6.2bp, with 2.6bp reflected in 2024.

It has already been reflected in the stock market. In the midst of a major market downturn, last week the major banks performed well, with ICBC +1.05%, ABC +1.39%, and BOC +2.0%.

But don’t have overly high expectations. Just as on the trading day after the rate cut, while the weighted bank stocks rose, the overall market did not respond favorably.

In other words, the change in the expectations of microeconomic entities is a slow process—just like the previous change in expectations, which actually took about two years.

To turn expectations around, it may take an equal amount of time or even greater counteracting forces.

Why aren’t the expectations of microeconomic entities too optimistic?

From a macroeconomic perspective, although credit data, industrial added value data, and consumption data have shown year-on-year marginal recovery, some of the growth rates are still relatively fast.

For example, the social zero data, with a year-on-year growth rate as high as 10.1%. But due to the low base of last year, the actual improvement for residents is not that good.

The two-year compound growth rate of social zero data is only 1.8%. This year, several industries, such as real estate and finance, have been severely affected, and the actual perception of microeconomic entities is somewhat chilly.

From the high-frequency data of the year-end economy, there are also signs of a slight slowdown. Tourism, offline consumption, construction intensity, and infrastructure activities have all shown some degree of slowdown.

Currently, the deposit interest rate has dropped to the lowest level since the founding of the People’s Republic of China. What does this mean for us?

Low or even negative interest rates frequently occur in countries like Europe, America, and Japan.

Zhou Xiaochuan, former Governor of the People’s Bank of China, said at an important conference in 2019:

China can try to avoid entering the era of negative interest rates as quickly as possible. Note that the wording is “try to avoid entering the era of negative interest rates as quickly as possible.”

At the same time, he also said something at the 2019 Innovation Economic Forum:

“In ten years, if you want to buy a 3% wealth management product, you may have to rely entirely on luck, just like the license plate lottery.” This is not an exaggeration.

2008 after the financial crisis, the economies of Europe, America, and other regions entered a “low-interest rate” or even “negative interest rate” era.

Until recently, due to attempts to control the soaring inflation, many countries such as Europe and America have raised interest rates multiple times.

Repeated interest rate hikes seem to herald the end of the low-interest-rate era.

But the IMF poured cold water on this.

According to the latest issue of the World Economic Outlook, under the impetus of population aging and weak productivity growth, interest rates in the United States and other industrialized countries will return to the super-low levels before the outbreak of the epidemic.

It seems that countries such as Europe and America are still struggling in the quagmire of low or even negative interest rates.

From this, it can also be seen that the current economic recovery in our country is not stable, and monetary policy is likely to remain loose for a long time.

And until China’s economy fully recovers, low-interest rates are expected to persist for a long time.

There isn’t much room for further reduction; the 1-year term has limited space left, it’s not even close to 1.5%. Going further down, the 5-year term is less attractive than the 3-year term, and the 3-year term is less appealing than the 1-year term. If the 1-year term interest rates are lowered any further, people might just keep their funds in demand deposits. We can’t let the interest rate on demand deposits go to zero or even negative because that would lead to a run on the banks. If it goes to zero or near zero, people may not trust banks either, and liquidity could become a concern.

Furthermore, it’s challenging to lend out money in this situation. Banks lower the lending rates to encourage lending, but they also lower the deposit rates to maintain their interest margins. However, deposit rates are related to attracting liquidity. If deposit rates are too low, it could be difficult to attract funds. Additionally, in a low-interest-rate environment, there may not be many borrowers. In simple terms, the primary source of income that banks rely on for survival isn’t profitable. So, what’s the use of saving when you can’t generate income from your primary business? It’s a difficult situation.

Ultimately, the market lacks confidence. Without confidence, banks can’t lend effectively, and without lending, they struggle to generate profits. They can only make adjustments and find a foothold in a limited space.

Banks themselves rely on market confidence, and the foundation of the financial industry is built on mutual trust. If this market condition persists, banks will have no choice but to shrink, reduce their scope of operations, and cut unprofitable branches to survive.

Banks are essentially in the business of money, attracting deposits and lending them out to earn the spread in between.

Currently, the entire national economy is slowing down, and the high leverage in the real estate market has reached a precarious level. Unfinished buildings are already showing the consequences, affecting millions of families. These are potential destabilizing factors.

Therefore, reducing leverage at the societal level and lowering mortgage rates for ordinary households are important ways to alleviate social tensions.

After September 25, 2023, most banks have lowered mortgage rates in accordance with the decisions made by the authorities. Now, the first-time homebuyer mortgage rates for most households are at 4.3%, which has effectively reduced the burden on these households, although not by much.

In the second half of the year, adjustments to the real estate market have accelerated significantly, but the market’s response has remained subdued. Therefore, it can be argued that there is a gap between the operation intensity of policies and the expectations of the people. However, if banks were to substantially lower their profits, it could potentially lead to a banking system crisis, which is also unacceptable.

Therefore, banks need to maintain their interest rate spreads.

In other words, bank interest rates will need to be further reduced, which is also in preparation for further lowering loan interest rates.

Taking the example of the dot-com bubble around the early 2000s, the U.S. economy was also in a slump at that time. To stimulate growth, the Federal Reserve took decisive action by cutting interest rates: the Fed lowered rates from 6.24% in 2000 to 1.13% in 2003.

This effectively reduced borrowing costs in the market, giving some companies room to breathe.

Currently, looking at China’s one-year LPR rate of around 3.6% and the five-year LPR rate of 4.2%, there is still significant room for interest rate cuts in China.

The current economic problems are closely related to the oversaturated real estate market. As income inequality has widened, the market has stagnated. In the face of this situation, following the theories of Western economists, the best course of action is to implement helicopter money, and it needs to be done quickly.

Here, giving away money is not feasible, but we can print money. However, consumers or businesses need to borrow it to make it circulate. Therefore, the actions of tax cuts and interest rate reductions need to be swift.

The move by banks to follow the trend of lowering deposit rates is just a basic operation. This kind of rate cut will not stop here. The U.S. is also finding it increasingly difficult to raise interest rates. Once they stop raising rates, the pressure on our side will decrease.

After the major banks have lowered their deposit rates, the joint-stock banks have collectively lowered their time deposit rates today. Overall, the reduction is largely consistent with that of major banks.

Today (December 25th), Ping An Bank, Shanghai Pudong Development Bank, Huaxia Bank, Guangfa Bank, Minsheng Bank, China CITIC Bank, China Everbright Bank, Hengfeng Bank, Zhejiang Rural Commercial Bank, Bohai Bank, and Industrial Bank have all announced on their official websites that they will adjust the RMB deposit rates from December 25, 2023. The rate adjustments for fixed-term deposits are consistent with those of state-owned banks.

Ping An Bank, Shanghai Pudong Development Bank, Huaxia Bank, Guangfa Bank, Minsheng Bank, China CITIC Bank, China Everbright Bank: The rates for three months, six months, one year, three years, and five years for fixed-term deposits are 1.20%, 1.45%, 1.65%, 2%, and 2.05%, respectively, all lowered by 10, 10, 10, 25, and 25 basis points.

Hengfeng Bank, Zhejiang Rural Commercial Bank: The rates for three months, six months, and one year for fixed-term deposits are 1.20%, 1.45%, and 1.65%, respectively.

Bohai Bank: The rates are 1.23%, 1.49%, and 1.65% for three months, six months, and one year, respectively, all lowered by 10 basis points.

For three years and five years, Hengfeng Bank and Bohai Bank have lowered their deposit rates from 2.55% to 2.3%, and Zhejiang Rural Commercial Bank has lowered its rates from 2.5% and 2.55% to 2.25% and 2.3%, respectively, all lowered by 25 basis points.

The two-year rates for different joint-stock banks are as follows:

Ping An Bank: Lowered from 2.1% to 1.9%.

Minsheng Bank: Lowered from 1.95% to 1.75%.

China CITIC Bank: Lowered from 1.9% to 1.7%.

Hengfeng Bank, Bohai Bank, and Zhejiang Rural Commercial Bank: All lowered from 2.1% to 1.9%, a decrease of 20 basis points.

The rest of the joint-stock banks mentioned above: Lowered from 2% to 1.8%, a decrease of 20 basis points.

The current low-interest rate environment has just begun, and it will only get lower in the future.

As early as 2019, former People’s Bank of China Governor Zhou Xiaochuan had warned that we would eventually enter a negative interest rate era.

Faced with the decline in deposit rates, how should ordinary people save money in the future?

The first thing is to take advantage of the current situation and deposit long-term savings.

A year ago, whether it was fixed-term deposits or large-denomination certificates of deposit, there were still some at 5% interest rates.

Even six or seven months ago, there were plenty at 4%.

But now, as everyone can see, the rates keep dropping.

And at the current rate of decline, it’s likely to continue for the next few years.

So, don’t think that last year’s 5% or 4% rates are better than the current ones. The deposit rates you get now are likely to be the highest for the next decade. Delaying your deposits for a couple of months could mean missing out on tens of thousands in interest.

A bird in the hand is worth two in the bush. If you want to save money in a bank, now is the time to choose longer and higher rates.

First, try to increase the term of your deposits. In a declining deposit rate environment, depositing long-term savings allows you to lock in higher deposit rates for a longer period, so you can earn more interest after deposit rates decline.

Second, consider purchasing large-denomination certificates of deposit. In addition to current and fixed-term deposits, there are various deposit methods in banks, such as specialized deposits, large-denomination certificates of deposit, structured deposits, and notice deposits. You can purchase these products based on your own circumstances, as they tend to offer relatively higher interest rates.

Third, you can choose to save money in some small and medium-sized banks. In the tide of declining deposit rates, although the deposit rates of small and medium-sized banks have also decreased, some of them have decreased less. For example, among a few small and medium-sized banks, the deposit rate for a five-year term can reach 4%.

Finally, you can consider other ways to save money. Saving money doesn’t have to be in a bank; there are other safe ways to save money, such as buying government bonds, investing in cash management funds, and participating in reverse repo transactions.

The second thing, if you have idle money, take advantage of high-yield options like Yu’ebao (an online money market fund).

For those who don’t like to keep money in the bank, pay attention!

There is currently a phenomenon called “interest rate inversion.” You can earn more from putting money in Yu’ebao than by depositing it for one year.

This is because the rate cut is a transmission mechanism; deposit rates drop first, and other rates follow slowly. So it’s best to deposit and buy while it hasn’t completely lowered. This kind of interest rate inversion opportunity won’t last forever.

Next year, if you want to easily earn a few hundred yuan more, it may not be so easy.

In addition to Yu’ebao, there are other similar products that offer even higher interest rates, while being as liquid as time deposits. For example, China Merchants Bank’s Chaobao offers an annualized rate of 2.3%, similar to that of a 3-year time deposit. WeBank’s Huoqi+ offers an annualized rate of 3.26%, higher than the 5-year time deposit rates of the six major banks.

You can choose based on your actual situation.

A very obvious issue: banks are also facing tough times.

Why is this being said? Until this year, there has been a consistent demand for banks to reduce fees and interest rates on loans have been steadily decreasing. Some banks, in order to secure business, have even been willing to operate at a loss.

With the continuous narrowing of the interest rate spread between deposits and loans, banks are generally under pressure due to declining profits. However, other non-interest income streams are far from being able to compensate for this gap.

When bank profits were still healthy, deposit rates could be floated, including high-cost large deposits. In order to control high-cost liabilities, the national-level requirement to lower deposit rates was, from the banks' perspective, a way to reduce service pressure and control the narrowing of the interest rate spread between deposits and loans.

Of course, some people argue that the reduction in deposit rates is to stimulate consumer spending or promote investment. However, the most crucial factor at present is consumer confidence, driven by positive economic expectations for the future. Based on the current savings habits of residents, lowering interest rates has not deterred some individuals from opting for fixed-term deposits. When there are no attractive investment options available, conservatively earning some savings interest may be the wisest choice.

Loan interest rates have reached a point where further reductions are impractical, and deposit rates have been steadily decreasing. The effectiveness of monetary policy is yet to be further validated next year, and it is believed that various indicators will show significant changes next year.

We will watch the situation closely.

The inevitable trend is that interest rates will continue to decline in the future.

Once the US Federal Reserve cuts interest rates, deposit rates will decrease even more significantly.

There’s no other way; this is aimed at stimulating investments and consumption, including the stock market and real estate.

Let’s do some calculations.

If you have 1 million and don’t buy a house, renting a 1 million property would cost you 1,500 yuan per month in rent.

If you keep your 1 million in the bank, the annual interest would be 24,000 yuan, which is 2,000 yuan per month.

Subtracting 2,000 from 1,500, it’s equivalent to “earning 500” per month.

If in the future, the annual interest rate drops to two percent, it would basically break even, and the advantage of buying a house would emerge.

These past two years, the frequency of interest rate cuts has indeed been quite turbulent.

When we deposit money in the bank, if the interest rate drops, it means that the interest we receive will decrease.

Conversely, for businesses or friends with mortgages, interest rate cuts can be seen as a significant benefit. Businesses can reduce their financing costs, and friends with mortgages can alleviate some financial pressure.

In the People’s Bank of China’s publication “Continuing to Deepen the Market-Oriented Reform of Interest Rates,” three key points regarding interest rate reform are emphasized, which indicate the future trends.

Here are two of these points:

The second point mentions “guiding a decrease in financing costs,” which essentially means reducing the cost for businesses when borrowing money. This can help expand production and increase employment opportunities.

The third point, “reducing the interest burden on residents,” is straightforward. It involves lowering interest rates on existing mortgages to provide some relief to those with home loans. This, in turn, can free up funds for investment and consumption, stimulating the economy.

Reducing deposit interest rates, in plain terms, is all about stimulating consumption!

The goal is to boost economic growth, increase demand for financing, and encourage people to spend and borrow, rather than remaining passive.

Many countries have past experiences with interest rate declines. In the long term, our interest rates will continue to decrease. There may be short-term fluctuations due to economic cycles, but the overall trend will remain the same.

Although, for someone like me with limited savings, the interest rate decrease doesn’t cause much anxiety, it’s a different story for those with substantial assets or those looking to earn interest and relax.

For such individuals, it’s advisable to prepare early for interest rate cuts and consider savings insurance with locked-in interest rates for the next few decades, which is quite appealing.

Let’s briefly discuss savings insurance, a popular and suitable product for the average person.

It mainly includes two types: increasing-endowment life insurance and annuity insurance.

Let’s talk briefly about these two types of savings insurance as shown in the figure below:

Both increasing-endowment life insurance and annuity insurance essentially belong to savings insurance, but they differ in product structure.

Both require you to deposit money upfront and then withdraw it later, but annuity insurance has a longer lock-in period, typically a decade or two, before you can start receiving regular payouts.

In simple terms:

Annuity insurance is similar to our current social security retirement benefits, where you can only receive a fixed amount of money at a fixed time (e.g., at age 60 or 65), and you continue to receive it as long as you live.

Increasing-endowment life insurance is a bit like “Yu’e Bao” (a popular Chinese money market fund). You can withdraw money whenever you want without fixed withdrawal times or limits. The remaining balance continues to grow at the original interest rate.

So, we can see that the key feature of annuity insurance is “fixed payouts,” while the key feature of increasing-endowment life insurance is “flexibility.”

In conclusion,

Interest rate cuts are likely to be a future trend.

For those with substantial assets or those seeking to earn interest and relax, it’s advisable to prepare early for interest rate cuts.

Regardless of the method chosen to manage assets, we must ensure the safety, earmarking, and sustainability of funds.

My goal is to help you choose the right insurance and ensure you don’t lose out when buying insurance!

Just a few days ago, we mentioned that bank deposit interest rates would continue to decline.

However, it happened unexpectedly fast, catching us off guard!

Even the meat buns for breakfast these days don’t taste as good.

The Bank of China has announced a formal reduction in deposit interest rates starting today, December 22nd.

For three-year deposits, the rate has been reduced by 25 basis points to 1.95%, and for five-year deposits, it’s down by 25 basis points to 2.0%.

This marks the fifth significant rate cut this year, and it’s truly unusual and alarming.

To recap, the first rate cut occurred in April, the second in June, the third in September, the fourth in November, and now the fifth on December 22nd.

The frequency is astonishing, and we won’t delve into the underlying logic here.

Let’s empathize with the tears of savers.

Yesterday, if you deposited 100,000 yuan in a bank for a five-year term, you could have earned interest of 10,000 *2.25% *5 = 11,250 yuan.

Today, if you go to the bank, the interest has directly decreased by 1,250 yuan!

If you had a larger principal, the reduction would be even more significant.

Smaller banks may offer slightly higher rates, but this won’t last long; they will soon follow the footsteps of state-owned banks and continue lowering rates.

Even large-sum time deposits are suffering, with a reduction of 30 basis points. A 200,000 yuan deposit for three years will yield 1,800 yuan less in interest.


If the next cut happens, we’ll be on the brink of dropping below the 1% mark.

It feels like the era of negative interest rates is getting closer.

What can you do?

As always, when interest rates are sliding, and uncertainty outweighs certainty, thinking about preserving your capital should come before chasing investment fantasies. Actively manage your risks.

If you want higher interest rates than bank deposits while ensuring capital preservation and growth, the most secure method is to convert a portion of your funds into savings insurance, locking in a lifetime of 3%-4% compound interest.

Take, for example, this “Quick Return Annuity” product:

A 30-year-old male pays 100,000 yuan annually for three years. Let’s compare this to a time deposit.

As shown below, after paying the premium, it’s treated as a time deposit.

In the first year of the time deposit, the account continues to compound.

Starting from the second year, it pays out 9,820 yuan annually. By the sixth year, the account balance is 304,360 yuan, with 49,100 yuan in interest earned, equivalent to a simple interest rate of 2.34%, 34 basis points higher than the five-year bank deposit rate.

In the tenth year of the time deposit, the account holds 410,600 yuan in total, earning an extra 110,600 yuan.

The simple interest rate has reached 3.42%! As time goes on, the simple interest becomes more remarkable!

Before reaching a hundred years old, your principal remains, and you can receive 9,820 yuan in interest every year. If you no longer wish to deposit, you can withdraw and receive your entire investment back.

Whether it’s for education savings for 10-20 years or long-term financial planning and retirement, this product can meet your needs.

However, with regulatory changes looming, such high-yield products may disappear soon, so cherish them while they last.

I am Dora, a professional insurance evaluator who has reviewed over a thousand insurance products.

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