Against a backdrop of persistently narrowing net interest margins across the banking sector, with many institutions actively reducing high-cost liabilities, Bank of China has recently introduced a new 5-year personal large-certificate-of-deposit product, offering an annualized interest rate of 1.6%. This move makes it the only major state-owned bank currently providing such a long-term product.
As of July 3rd, a check of the bank's mobile app revealed that the available quota for the related products remained ample.
It is noteworthy that since mid-2025, 5-year large certificates of deposit have become virtually unavailable within the major state-owned banking system. The decision by Bank of China to relaunch such a long-term product against the prevailing trend raises questions about its strategic rationale.
Dong Ximiao, Chief Researcher at Zhaolian and Executive Director of the Shanghai Finance and Development Laboratory, commented on this development. He stated that this action should not be interpreted as a reversal signal. Instead, it reflects Bank Of China Limited's strategy based on its own asset-liability situation. By offering a scarce long-term deposit instrument, the bank aims to lock in long-term liabilities from depositors in advance, thereby optimizing its liability structure, while also leveraging its scale advantage to attract deposits in a differentiated manner. Considering the objective reality of continuously shrinking net interest margins in the banking industry, he believes it is unlikely that other major banks will follow suit.
Ample Availability for Five-Year Product
According to the announcement for the first issue of personal large certificates of deposit in 2026 released by BANK OF CHINA, the bank began selling a new series on July 1st. The annualized interest rates for the standard products with terms of 1 month, 3 months, 6 months, 1 year, 2 years, 3 years, and 5 years are 0.8%, 0.8%, 1.0%, 1.1%, 1.2%, 1.55%, and 1.6% respectively. The minimum deposit amount for all is 200,000 yuan, and they are available to individual customers. These products support transfer, with a minimum holding period of 1 day for such transfers.
Additionally, this issue includes a "No. 1 Product" for specific customers and a "No. 3 Product" for individual customers. The announcement also notes that sales strategies may vary by region, product quotas are limited, and specific details should be confirmed with local Bank of China branches.
Notably, compared to the bank's first issue of personal large certificates of deposit in 2025 launched on May 20th last year, the interest rates for the 1-month, 3-month, 6-month, and 1-year terms in this new issue have all been reduced by 10 basis points. The rates for the 3-year and 5-year terms remain unchanged. However, the target customer base has been significantly expanded from previously being limited to specific customers to now including all individual customers.
A check of the Bank of China mobile app on the morning of July 3rd showed that the bank currently has two types of 3-year large certificates of deposit for sale: "2025 Issue 1 Three-Year" with an annual interest rate of 1.55%, and "2026 Issue 1 Three-Year No.3" with an annual rate of 1.5%. Similarly, there are two 5-year products: "2025 Issue 1 Five-Year" at 1.6% and "2026 Issue 1 Five-Year No.3" at 1.55%. All these products went on sale starting July 1, 2026, and as of the morning of July 3rd, the remaining quotas were shown as ample.
Inquiries with bank staff revealed that products labeled as "2025 Issue 1" might be previously unsold quotas from 2025 that have now been reopened for sale.
Meanwhile, for standard time deposits with a minimum deposit of 50 yuan on the Bank of China app, the current annual interest rates are 1.25% for 3 years and 1.3% for 5 years. If the deposit amount reaches 5,000 yuan, the rates for 3-year and 5-year terms increase to 1.55% and 1.6% respectively, aligning with the rates for large certificates of deposit.
Dong Ximiao elaborated that Bank of China's move to list a full range of products, including the 5-year term, in an environment where long-term large certificates of deposit are nearly extinct, is not a reversal signal. In a market dominated by expectations of declining interest rates, the bank is acting based on its own asset-liability position. By providing scarce long-term deposit tools, it aims to lock in long-term liabilities from depositors ahead of time, optimize its liability structure, and use its scale advantage to attract deposits differently.
Other Banks Tighten Mid-to-Long Term Deposit Offerings
Investigations reveal that currently, apart from Bank of China, other major state-owned banks have not listed 5-year large certificates of deposit. For instance, the longest term available for China Construction Bank's large certificates of deposit is 3 years with an annual rate of 1.55%. Similarly, the longest term offered by Industrial and Commercial Bank of China is also 3 years, with a maximum annual rate of 1.55%.
In fact, the scarcity of 5-year large certificates of deposit has been the norm since mid-2025. At that time, none of the six major state-owned banks had such products for sale. Not only that, but joint-stock banks and smaller regional banks have also been tightening the supply of mid-to-long term large certificates of deposit. Not only have 5-year products largely disappeared, but 3-year products are also gradually becoming less common. Taking China Merchants Bank as an example, the longest term for its large certificates of deposit currently available on its app is only 2 years, with a minimum deposit of 200,000 yuan and an annual interest rate of 1.4%.
According to statistics from the National Financial Regulatory Administration, the net interest margin for commercial banks in Q1 2026 was 1.4%, a decrease of 2 basis points from the previous quarter, continuing the downward trend.
Dong Ximiao reiterated that given the objective reality of continuously narrowing net interest margins in the banking industry, it is unlikely that other major banks will follow Bank of China's lead. For depositors, while the 1.6% rate offers some value for locking in returns among current deposit transfer products, and the product supports transfer, they need to be fully aware of the liquidity cost associated with locking up funds for five years. Whether this is a worthwhile calculation depends on an individual's judgment of future interest rate trends and their need for fund liquidity.
Furthermore, banks are simultaneously scaling back on medium and long-term fixed deposits. Since the beginning of this year, several private banks, including Shanghai Huarui Bank, have effectively suspended medium and long-term fixed deposit business by delisting products or continuously marking them as "sold out."
Analysis from CITIC Securities Research suggests that deposit-gathering strategies in the current market are showing clear divergence. On one hand, several private banks have successively delisted or reduced rates for medium and long-term fixed deposit products. Major state-owned and joint-stock banks are also generally compressing the supply of large certificates of deposit, with many having suspended 5-year products or raised subscription thresholds. On the other hand, some regional small and medium-sized banks are increasing their issuance of large certificates of deposit, recently launching related products intensively, with individual products still offering annualized rates above 2%. The common logic behind both approaches is to rebalance scale, cost, and stability in a low-interest-rate environment.
CITIC Securities Research further pointed out that in the current context of a continuously declining interest rate benchmark and ongoing pressure on net interest margins, the delisting of medium and long-term fixed deposits by some banks is essentially an adjustment to actively reduce high-cost liabilities and optimize their liability structure. Private banks, which previously relied more on online channels and high-interest deposits to acquire customers, have relatively weaker customer loyalty. Once they use high prices to absorb long-term funds, the rigidity of their liability costs becomes stronger, making it even more necessary for them to adjust their product structure in advance. From the perspective of the deposit-loan spread, since 2026, the growth rate of deposits in deposit-taking financial institutions has marginally slowed, while loan growth remains low. This reflects weak real economic financing demand coexisting with slowing bank liability growth. Small and medium-sized banks still face pressure from relatively weak deposit growth and an expanding deposit-loan gap. Besides the systemic pressure from the interest rate downtrend cycle, new regulations on assisted lending have further constrained the space for some private banks to deploy high-yield assets.