After a six-month hiatus, five-year large-denomination certificates of deposit (CDs) are back on the shelves at three major state-owned banks. Industry insiders point out that the reintroduction of these products by multiple banks is not a reversal of the interest rate trend, but rather a strategic move driven by the dual need to optimize liability structures and intercept maturing funds. Amidst the ongoing pressure on banks' net interest margins (NIMs), it is unlikely that many other institutions will follow suit.

Three State-Owned Banks Relaunch Five-Year CDs

On July 10, China Construction Bank (CCB) launched two five-year personal CD products, with annualized interest rates of 1.55% and 1.60%, respectively, each requiring a minimum subscription of 200,000 yuan. A staff member at a Beijing branch confirmed that both products currently have available quotas, and customers can purchase them either online or in-branch as needed.

On July 8, Agricultural Bank of China (ABC) issued the "Jinsui 2026 Phase 33" personal CD, which has a five-year term, an annualized interest rate of 1.60%, and a minimum purchase amount of 200,000 yuan. However, this product is only available for purchase at the counter. An ABC customer service representative stated that the product's quota is updated daily, and interested customers can contact their local branch for details.

On July 1, Bank of China (BOC) officially began selling its latest series of CD products. Among them, the five-year CD requires a minimum deposit of 200,000 yuan and offers a maximum annualized interest rate of 1.6%. According to inquiries, the product with a 1.6% interest rate is currently out of stock, while the five-year "Product No. 3" (with a 1.55% rate) is still available for purchase.

Among joint-stock banks, Ping An Bank issued a five-year CD product with an annualized interest rate of 1.75% on July 14. Huaxia Bank listed several five-year CD products on July 15, with the highest annualized interest rate reaching 1.8%. China Minsheng Bank's currently available five-year CDs offer a maximum annualized interest rate of 1.77%. Additionally, some smaller and medium-sized banks have also reintroduced high-interest, long-term fixed deposit products. For example, Chongqing Fumin Bank re-listed its three-year and five-year CDs in early July, with annualized interest rates of 2.15% and 2.05%, respectively, requiring a minimum deposit of 500,000 yuan.

Financial Professor Tian Lihui from Nankai University analyzed that the core reason for several banks restarting five-year CDs is the dual need to optimize their liability structure and intercept maturing funds, rather than a reversal of the interest rate trend. Major state-owned banks like BOC, ABC, and CCB are re-launching these products primarily because the volume of five-year deposits maturing in 2026 is estimated to be between 5 trillion and 6 trillion yuan. Banks need to secure long-term liabilities in advance to alleviate the pressure of maturity mismatches. For smaller and medium-sized banks, this is more about meeting periodic deposit-raising needs, but it essentially remains a strategic adjustment under the pressure of narrowing NIMs.

Lou Feipeng, a researcher at the Postal Savings Bank of China, noted that the move by multiple banks to restart five-year CDs is mainly to lock in long-term deposit costs. In a downward interest rate cycle, locking in funds for five years at an interest rate of around 1.6% in advance can help mitigate the future pressure of declining reinvestment yields on the asset side. Some smaller banks are using higher interest rates to attract deposits, primarily to optimize their liability structure, meet liquidity needs at the end of a quarter or during annual assessment periods, and stabilize their deposit scale.

Dong Ximiao, Chief Economist at Merchants Union and Deputy Director of the Shanghai Financial Development Laboratory, pointed out that this round of relaunches is a phased choice by banks, balancing factors such as liability management, capital retention, market competition, and interest margin improvement. "Against the backdrop of long-term CDs being nearly extinct, pioneering their issuance can create a differentiated advantage in deposit-taking. For instance, BOC's five-year rate of 1.60% is significantly higher than the current benchmark deposit rate of 1.30%, and it supports transfer and pledge, making it quite attractive to low-risk investors."

Widespread Bank Follow-Through Unlikely

Although BOC, ABC, and CCB have successively listed five-year CDs, long-term deposit products remain scarce, and their interest rates have generally entered the "1% era." For example, among the major state-owned banks, Industrial and Commercial Bank of China (ICBC) offers products with terms of 1, 3, 6, 12, 24, and 36 months, with the highest annualized rate for the three-year product being 1.55%. Bank of Communications (BoCom) has no CDs currently for sale, and Postal Savings Bank of China (PSBC) has only issued one-year products this year. Among joint-stock and city commercial banks, China Merchants Bank's longest-term CD is two years with a 1.4% rate, Shanghai Pudong Development Bank (SPD Bank) offers a three-year CD at 1.75%, CITIC Bank has a 1.75% rate for a three-year CD requiring a 500,000 yuan minimum, and China Zheshang Bank offers a 1.85% rate for a three-year CD with a 300,000 yuan minimum. Bank of Beijing's longest-term product is one year at 1.3%.

In recent years, as the banking industry's net interest margins have continued to face pressure, long-term deposit products have also largely disappeared. Last November, the six largest state-owned banks collectively withdrew their five-year CDs, sparking widespread attention, and some smaller banks followed suit by canceling their three-year and five-year products. Now, with the three major state-owned banks bringing them back, will more banks follow and list long-term deposit products?

In Dong Ximiao's view, the likelihood of a comprehensive follow-up by a large number of banks is low, although some smaller banks might be passively forced to do so. For national banks, the current NIM for commercial banks has dropped to a historic low of 1.40%. Lengthening the deposit duration will increase the cost pressure on liabilities, and the industry-wide trend of "shortening duration" since the end of 2025 has not reversed. Therefore, large banks lack the incentive to follow. However, some smaller banks with weaker brand influence and single-channel customer acquisition might be compelled to issue similar products to prevent deposits from being poached by larger banks. This is not a necessary choice and depends on each bank's asset-liability situation, liquidity needs, and interest rate expectations.

"Overall, the restart of five-year CDs this time is more of a phased, individual market phenomenon than a reversal of a long-term trend. The supply will remain scarce, and a widespread issuance is unlikely," Dong Ximiao said.

Lou Feipeng predicts that other banks might follow, but the probability of a comprehensive issuance wave is low. On one hand, major state-owned banks have ample liabilities and are more inclined to reduce high-cost deposits, so their willingness to issue is limited. On the other hand, smaller banks may continue to follow to compete for deposits, but the potential for interest rate increases is extremely limited due to the pressure of narrowing NIMs and regulatory norms against high-interest deposit-taking.

"It is difficult for a large number of banks to follow suit on a massive scale; the key constraint lies in the industry's fundamentals," Tian Lihui stated bluntly. The current NIM for commercial banks has narrowed to a historic low of 1.40%. Long-term deposits will rigidly increase liability costs, and most banks lack matching medium and long-term asset allocation channels. Among the major state-owned banks, only BOC has the liability matching capability due to its cross-border business characteristics, while ICBC and others still use a three-year term as their upper limit. This shows that structural differentiation is the main theme.

It is noteworthy that in June of this year, the central bank issued a draft for comments on a new management method for large-denomination CDs. This proposal lowers the minimum subscription threshold and clarifies that CD transfer, early withdrawal, and redemption services can be conducted through banks' own channels and third-party compliant platforms recognized by the central bank. Industry experts generally believe that the new rules will improve the liquidity of the secondary market for CDs, enhancing product attractiveness and banks' willingness to supply them.

"Although the central bank's new rules broaden the transfer channels, in a low-interest-rate environment, banks generally prefer short-term products to flexibly lower costs," Tian Lihui further explained. In the future, only regional banks may issue them periodically to meet specific time-point targets, and the industry-wide tone of "short duration, low interest rates" remains unchanged. "For five-year CDs to reverse expectations, they would need to break through the threshold of 'token supply.' At the current rate of 1.60%, the scarcity of the five-year product itself confirms its non-mainstream position."