Banks were having trouble retaining low-cost demand deposits because money market funds such as Yu E Bao offer higher yields and convenient withdrawals. The companies that manage those funds in turn lend the capital to banks in the form of inter-bank loans, which cost more to borrow than demand and term deposits.

As a result, CCB's net interest rate spread, a profitability indicator that measures the difference between deposit and loan interest rates, has narrowed by four basis points