The 5-year large denomination certificate of deposit, which was once suspended from issuance, is returning to the "shelf" of banks.

Since July 2026, major state-owned banks such as China Agricultural Bank, China Construction Bank, China Construction Engineering Corporation, and China Communications Corporation have successively issued 5-year large denomination certificates of deposit. Joint stock banks such as Ping An Bank, Huaxia Bank, and Minsheng Bank, as well as some small and medium-sized banks and foreign banks, have also intensively listed related products. Some popular products were displayed as "sold out" shortly after their launch, which is in sharp contrast to last year's contraction of long-term large denomination certificates of deposit and the temporary delisting of 5-year products.

Why are large denomination certificates of deposit "resurfacing" at this moment? Should depositors follow suit and grab products with low returns?

Multiple Banks Relist

Around November last year, the six major state-owned banks, namely Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Communications Bank of China, and Postal Savings Bank of China, collectively delisted 5-year large denomination certificates of deposit. Some joint-stock banks and city commercial banks followed suit by shrinking their long-term deposit products, with large banks selling large denomination certificates of deposit with maturities of 3 years or less at one point. The 3-year interest rate is about 1.55%, while the 1-year and 2-year rates are even lower, generally around 1.20%.

This summer, the situation has changed. In early July, Bank of China issued the first batch of personal large denomination certificates of deposit for 2026, covering a total of 7 terms from 1 month to 5 years, with a maximum annual interest rate of 1.60% for 5-year terms. Subsequently, Agricultural Bank of China and Construction Bank followed suit. On August 1st, Industrial and Commercial Bank of China issued two 5-year large denomination certificates of deposit with annual interest rates of 1.60% and 1.55%, respectively. On August 5th, Bank of Communications also launched related products.

Joint stock banks and small and medium-sized banks are also closely following the intensive listing of products, with interest rates for products of the same term generally slightly higher than those of state-owned large banks. Ping An Bank issued a 5-year product with an annualized interest rate of 1.75% on July 14th, while Huaxia Bank launched multiple products with interest rates ranging from 1.75% to 1.80% on July 15th. Some products of Minsheng Bank reached a maximum of 1.79%. Some small and medium-sized banks have higher interest rates, such as the 2-year annualized interest rate of 2% for Xishang Bank's large denomination certificates of deposit, and 2% and 2.05% for Zhongbang Bank's 3-year and 5-year certificates of deposit, respectively. However, some products come with regional or customer restrictions.

Foreign banks have also joined this round of issuance. Yongfeng Bank (China), East Asia Bank (China), and HSBC Bank (China) have successively launched RMB large denomination certificate of deposit products in the past two months.

As soon as the bank put the products on the shelves, the depositors had already started to grab them. The 5-year large denomination deposit certificate of state-owned banks with an annual interest rate of 1.60% has been repeatedly displayed as "sold out" on the mobile banking platform, and some products have only been online for a few weeks before reporting insufficient credit limit.

Why are you 'back in the world' at this moment

To understand why large denomination certificates of deposit are "reappearing" at this moment, we need to stack two lines together.

The first line is the concentrated maturity of a large number of deposits, and banks have to find ways to catch and retain this money, which is the pressure brought by the "deposit relocation".

According to the Huatai Securities team's calculation, the maturity scale of fixed deposits with a maturity of over 1 year (including ordinary fixed deposits and personal large denomination certificates of deposit) in 2026 is about 50 trillion yuan, of which the maturity scale of 2-year and 3-year deposits exceeds 20 trillion yuan, and the maturity scale of 5-year deposits is also between 5 trillion and 6 trillion yuan. A considerable portion of these deposits were high interest funds locked in when interest rates were still above 3% a few years ago, and now they are being renewed at maturity, facing the reality that interest rates are almost halved. If banks do not provide undertaking products with sufficiently long terms and slightly higher returns than ordinary fixed deposits, this batch of funds is easily flowing into the wealth management market or interbank "moving".

The second line is that bank lending is mostly long-term, while deposits are mostly short-term, resulting in a mismatch in terms of maturity. Therefore, it is necessary to issue some long-term deposit products to lock in funds.

According to data from the State Administration for Financial Regulation, the net interest margin of commercial banks in the first quarter of 2026 has dropped to a historic low of 1.40%, and state-owned large banks have only 1.29%. This means that it is difficult for banks to retain deposits by significantly raising prices. So, 5-year large denomination certificates of deposit were pushed to the forefront, with slightly higher interest rates than 3-year regular fixed deposits, but able to lock in two more years of funds.

For banks: large banks lock up money, small banks retain customers

For state-owned banks, the core demand for restarting the 5-year term is to "lock in long money and catch the expiration". Against the backdrop of the intensification of the trend towards short-term deposits and the continuous decline in the proportion of current accounts, the duration of bank liabilities continues to shorten, while there is still a demand for medium - to long-term investment on the credit side, and the pressure of duration mismatch is accumulating. Locking in funds for five years at an interest rate of 1.60% may increase the cost of debt in the current period, but in the downward trend of interest rates, it is equivalent to buying a "cost insurance" in advance: to avoid further decline in asset yields in the future, while the cost of debt remains high due to the short-term nature of deposit structures.

But for small and medium-sized banks, the situation is much more passive. The restart of 5-year large denomination certificates of deposit by major banks has directly intensified competition in the deposit market. Large banks, relying on their brand and branch advantages, have formed a "siphon effect", causing some city commercial banks and rural commercial banks to face pressure of deposit loss. In order to retain local core depositors, some small and medium-sized banks have had to raise the interest rate of 3-year large denomination certificates of deposit to around 2%, in order to retain local core depositors and form a differentiated advantage in attracting deposits. Xishang Bank's 2% 3-year products are only available for purchase by users within Jiangsu Province, while Zhongbang Bank's 2% to 2.05% products also have thresholds and limits. This is not without cost. Raising the interest rate of large denomination certificates of deposit is bound to further compress the net interest margin space, but in the eyes of small and medium-sized banks, the more urgent task now is to avoid deposit loss, stabilize debt side funds, and leave space for a "good start" in attracting deposits at the end of the year.

For depositors: Low returns, victory lies in stability

Standing on the side of depositors, one needs to first accept an unpleasant fact: the 1.60% five-year large denomination certificate of deposit is indeed lackluster in terms of absolute returns. But compared to the expectations of fluctuations in net asset value of bank wealth management, fund withdrawals, and even continued decline in deposit interest rates, it provides a "certainty" of principal and interest preservation.

Liu Xiaoshu, Chief Economist of Qingdao Bank, suggests that in the current market environment, investors should completely abandon the illusion of "low risk, high return". Any project that promises principal preservation and high interest, far exceeding the normal market return, has hidden dangers and should be resolutely avoided. Large amounts of funds should not be concentrated in a single product or institution. Instead, they should be stored in a decentralized manner to balance security, liquidity, and profitability. Older and stable investors mainly invest in deposits, large deposit receipts and treasury bond, and do not invest beyond their own capacity.

Ultimately, the resurgence of large denomination certificates of deposit is not simply a matter of interest rate concessions, but rather a refined rebalancing by banks between historically low net interest margins and a surge in deposit maturities. For banks, the short-term test is whether they can catch maturing deposits, while the long-term test is whether they can find a balance between debt costs, maturity structure, and customer stickiness.

For depositors, do not blindly follow the trend and rush to buy. A 1.60% five-year large denomination certificate of deposit can be used as part of a prudent allocation, but it is not advisable to overly concentrate funds or sacrifice liquidity for this purpose. Setting aside sufficient daily and emergency funds first, and then considering locking in long-term options based on one's own risk tolerance, is a more secure choice.

(The author of this article is a researcher at the Jingguan Research Institute)