China banks weigh trimming deposit rates as early as this week, Bloomberg News reports

(Reuters) -Chinese banks are set to cut rates on 300 trillion yuan ($42.20 trillion) of deposits as soon as this week, Bloomberg News reported on Tuesday, citing people familiar with the matter.

Major banks including Industrial & Commercial Bank of China (OTC:IDCBY) and China Construction Bank (OTC:CICHF) Corp will be guided by the central bank’s interest rate self-disciplinary mechanism to lower the rates on a number of deposit products, the report said.

Rates on one-year time deposits may drop by at least 20 basis points (bps), while those on longer tenors may come down at least 25 bps, the report added.

The major banks did not immediately reply to a Reuters request for comments.

In September, People’s Bank of China Governor Pan Gongsheng said the central bank would further lower deposit rates by 20 to 25 bps. The cuts, if to be implemented, would be the second round of across-the-board cuts this year after July.

The measure would help ease banks’ profitability pressure after the nation lowered mortgage rates and benchmark lending rates as part of its stimulus package to pull the economy out of its deflationary funk.

Chinese lenders have already been under strain due to weak loan demand and rising bad debts amid the broader economic slowdown and ongoing turmoil in the property sector.

($1 = 7.1091 Chinese yuan renminbi)