China said last week it would cut interest rates on existing mortgages and eased rules for first-time buyers in big cities, in what the central bank and financial regulators jointly said were moves "conducive to expanding consumption."
But to prevent profit margins from shrinking further, state-owned banks have also lowered deposit rates by 10-25 basis points in a coordinated move.
But they also warn that a 15 basis point cut in interest rates on Chinese households' 131.4 trillion yuan of deposits reduces interest income by 197 billion per year.
Mortgage rates for first homes are around 4%, while one-year fixed deposit rates are roughly 1.5%.
"People don't consume because they don't have money so cutting deposit rates cannot really work."
Persons:
Simon, Yu, government's, Ting Lu, Zhaopeng Xing, Li Xiao, Li, Guo, Nancy Yang, Yang, Jason Xue, Samuel Shen, Winni Zhou, Gao, Ellen Zhang, Ziyi Tang, Joe Cash, Marius Zaharia, Jacqueline Wong
Organizations:
Nomura, ANZ, HIT, Thomson
Locations:
SHANGHAI, BEIJING, Shanghai, Beijing, China, Guangdong, Wuhan