Banks Resume Five-Year Certificates of Deposit with Rates of 1.6%-1.8%, Some Face Inverted Yield Curve

In August, several listed city commercial banks resumed issuance of five-year certificates of deposit (CDs). Chongqing Bank announced on August 7 the return of its five-year personal large-denomination CD on a limited basis, with an annual interest rate of 1.8% and a minimum deposit of RMB 200,000. The product supports transfer and can be operated through online channels. Based on a principal of RMB 200,000, holding for five years yields interest income of RMB 18,000.

Changshu Rural Commercial Bank also issued a five-year CD with an annual rate of 1.70%. In July, some joint-stock banks, including Huaxia Bank, had already announced the resumption of five-year CDs through official websites and other channels. Thus, state-owned banks, joint-stock banks, city commercial banks, and rural commercial banks have all resumed the issuance of five-year CDs.

Nanjing Bank's Hangzhou branch offers a five-year personal CD with an annualized rate of 1.60%, with a minimum deposit of RMB 200,000; its three-year CD carries an annualized rate of 1.79%, also with a minimum of RMB 200,000. The branch's three-year personal time deposit yields an annualized rate of 1.85% with a minimum of RMB 200,000, while another three-year time deposit offers 1.80% with a minimum of RMB 10,000. The three-year time deposit rate exceeds the five-year CD rate, resulting in an inverted yield curve. Branches decide product rates and structures based on local deposit self-regulatory mechanisms and their own asset-liability management needs.