Shanghai residents put more savings in banks

By Zhang Fengming  |   2008-12-10  |     NEWSPAPER EDITION

TERM deposits in Shanghai rose robustly in November as households dashed to deposit money in bank accounts, fearing a further interest rate cut will trim their returns, the central bank said yesterday.

New household savings rose 28.03 billion yuan (US$4.1 billion) in November, up 5.15 billion yuan from a month ago, said the Shanghai headquarters of the People's Bank of China yesterday. It also marked a year-on-year growth of 15.35 billion yuan. The Chinese mainland stock market soared to its peak in late October 2007, when savings flowed out of bank accounts to stocks.

Households are opting for term deposits to lock in safe and stable returns as investment options are limited amid the sluggish stock and property markets. Expectations of more interest rate cuts have prompted them to put more money in banks as early as possible.

The central bank has cut its interest rates four times since September to bolster economic growth and stimulate lending. The one-year benchmark deposit rate fell from 4.14 percent to 2.52 percent. The central government announced a positive fiscal policy and a moderately easing monetary policy and economists see more rate cuts in the pipeline.

New yuan lending increased 24.04 billion yuan last month, up 16.96 billion yuan from a month ago, but a year-on-year drop of 4.17 billion yuan. The main new lending is fueled by domestic joint-stock banks.

Bank notes financing is the main driver for the month-on-month lending growth as lenders prefer this channel.

The decline in individual mortgage loans eased in November. However, the impact of the central government's policy to stimulate first-hand property buying is still being tested, the central bank said. Individual mortgages fell 1.44 billion yuan in November while loans dropped 2.11 billion yuan in October.