State-owned Banks Resume 5-Year Large-Denomination CDs with 1.6% Rate, Net Interest Margin Stabilizes

The deposit-loan interest margin is crucial for commercial bank profits. In recent years, as lending rates continued to decline, the banking industry broadly cut deposit rates to maintain stable margins. Large-denomination certificates of deposit (CDs) and ordinary deposits are both general deposits, carrying principal and interest guarantees and high safety. Compared with ordinary deposits, large-denomination CDs have three features. First, higher yields. Taking Bank of China’s 2026 first tranche of individual large-denomination CDs as an example, the annualized rates for 3-month, 6-month, 1-year, 2-year, 3-year, and 5-year standard products are 0.8%, 1%, 1.1%, 1.2%, 1.55%, and 1.6%, respectively, while the listed rates for ordinary deposits of the same maturities are 0.65%, 0.85%, 0.95%, 1.05%, 1.25%, and 1.3%, respectively. Second, stronger liquidity. Large-denomination CDs allow multiple partial early withdrawals, can be pledged for bank loans, and if the product pays interest in a lump sum at maturity, can be transferred to other investors. Third, a higher minimum subscription amount, currently generally RMB 200,000.

The minimum subscription amount for large-denomination CDs is relatively high, and although long-term products can be transferred, they still carry a certain time cost. For investors who prefer to allocate large sums of funds to low-risk areas for long periods and seek relatively higher returns, long-term large-denomination CDs with principal and interest guarantees may be worth considering.