(Yicai Global) June 18 -- China’s four biggest state-owned commercial banks have lowered interest rates on their three- and five-year certificates of deposit, according to Economic Daily.

Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank issued nearly CNY800 million (USD113 million) of the CDs between June 15 and yesterday, with interest rates at 1.45 times the benchmark, Economic Daily reported yesterday. They previously took 1.5 times the standard rate.

The falling rates show that the reform of China’s loan prime rate has helped make deposit interest rates more market oriented, the report cited an industry analyst as saying. The monetary policy transmission mechanism has pushed loan rates down since the LPR reform in August and commercial banks have less incentive to raise rates and attract deposits if they want to keep their assets and liabilities balanced, he added.

Several smaller banks began lowering their deposit rates earlier this year and have done so several times since. One of them, Zhangye Rural Commercial Bank in Gansu province, lowered its one-year deposit rate from 2.1 percent to 1.95 percent, or 1.3 times the benchmark interest rate.

The recent cut to deposit rates has also lowered the interest rates on market-priced products like money market funds and wealth management products, the report added. The seven-day annualized returns on Tianhong Asset Management’s Yuebao and WeChat’s Yue+ were 1.44 percent and 1.46 percent on June down, down 99 basis points and 113 basis points from the beginning of this year.

Editor: James Boynton