Ping An Bank
Ping An Insurance (Group) Company of China, Ltd. is a Shenzhen-based holding company whose subsidiaries mainly deal with insurance and financial services. The company was founded in 1988.
Ping An Bank raises deposit interest rates
Smaller lenders hike interest rates to lure investors, but the big banks won't follow suit
Ping An Bank has raised its interest rate for longer-term time deposits, in a sign that smaller lenders on the mainland are competing more fiercely to attract depositors.
The Shenzhen-based bank has raised its annual interest rate for two-year term deposits of more than 500,000 yuan from 3.75 per cent to 4.125 per cent, and to 3.9375 per cent for deposits of between 50,000 yuan and 500,000 yuan.
The 4.125 per cent interest rate hits the upper limit set by the People's Bank of China in June, capping the deposit rate at 1.1 times the benchmark rate of 3.75 per cent that was set in July.
Smaller lenders such as Bank of Ningbo have also set its interest rate for two-year term deposits at 4.125 per cent.
Ping An Bank's offer of the preferential rates for two-year deposits is effective from September 29 and the promotion will end after the bank's deposit targets are reached, the Ping An Bank officer said, without elaborating on the targets. She also said Ping An's Bank's move follows that of other lenders to attract depositors.
"Chinese banks are facing capital pressure, so they are stepping up efforts to attract more deposits," said Guo Tianyong, professor at Central University of Finance and Economics.
The central government's move to gradually liberalise the interest rate has led to fiercer competition among banks, Guo said. "Small- and medium-sized banks will likely follow suit."
In comparison, large lenders including Industrial and Commercial Bank of China, Bank of China, China Construction Bank, Agricultural Bank of China and Bank of Communications, have not changed their interest rate of 3.75 per cent on two-year term deposits since July.
Large banks are unlikely to follow Ping An's example as they are facing relatively easier capital pressure than smaller lenders, according to Guo. Although Guo said the increase in interest rate on time deposits would help draw more deposits, some depositors said they did not find the new rate appetising enough.
"An interest rate of 4.125 per cent is too low and the deposit period of two years is too long," an IT technician in Beijing surnamed Jia. "The return isn't attractive enough because of the rising consumer prices."