SHANGHAI (Reuters) -Five of China's largest banks cut personal deposit rates from Thursday, according to information available on the lenders' mobile apps, a move that could ease the pressure on their margins after recent lending rate cuts to revive the economy.
The banks, including Industrial and Commercial Bank of China Ltd (ICBC), the world's largest bank by asset, cut the interest rate for three-year term deposits by 15 basis points, the information showed.
The interest rates for one-year and five-year deposits were lowered by 10 basis points.
The official Securities Times earlier reported that some of China's big state-owned commercial banks would cut personal deposit rates from Thursday.
The move comes after China cut its benchmark lending rates last month, with the one-year loan prime rate (LPR) lowered by 5 basis points to 3.65% and the five-year LPR slashed by a bigger margin of 15 basis points to 4.30%.
The world's second-largest economy narrowly avoided contracting in the second quarter as widespread COVID-19 lockdowns and the slumping property sector badly damaged consumer and business confidence.
The reduction on deposits rates will help stabilise banks' profitability and support capitalisation, said Nicholas Zhu, a banking analyst at Moody's (NYSE:MCO).
"Banks have lowered yields on corporate and mortgage loans in response to the authorities' call for lower funding costs for the corporate sector and homebuyers," said Zhu.
"Lowering deposit costs will offset some of the pressure on NIM (net interest margin) narrowing."
Last month, some of the big banks warned that they are set to face a squeeze on their profit margins in the second half of this year, as they respond to Beijing's call to boost lending to the real economy and debt-laden property sector.
The cut will likely make room for further cuts to the LPR, wrote Nomura economists in a note.
Other banks that cut their personal deposit rates on Thursday included China Construction Bank (OTC:CICHF) Corp, Agricultural Bank of China (OTC:ACGBF) , Bank of Communications and Bank of China.