A number of China's commercial banks slashed interest rates on Monday on a wide range of Yuan deposits, following on from larger banks, in a bid to alleviate pressure on profit margins.

The cuts to the deposit rate follow on from a similar move by the country's largest state lenders at the end of last week, the second industry-wide cut in a year, Reuters reports, following prior action taken in September.

According to analysts, the deposit rate cuts will allow for more scope for an additional cut by the central bank in the near future in the reserve requirement ratio (RRR) to increase credit and bolster investment spending.

China Merchants Bank, China Citic Bank Corp and China Minsheng Banking Corp all slashed rates on demand deposits by five basis points to 0.2%.

The banks lowered rates on two-year time deposits by ten basis points, as well as three-year and five-year time deposits by 15 basis points.

The rate cuts will help to reduce pressure on lenders' profit margins as savings held in banks soared during the pandemic-fuelled economic slowdown.

Forecasts of a cut in the reserve requirement ratio have increased as China's economy lost momentum at the start of the second quarter, tackling mounting unemployment, a subdued property market and worsening exports, the Reuters report goes on to say.

According to the governor of the People's Bank of China, Yi Gang, during a meeting with financial institutions and businesses in Shanghai, the financial hub of the world's second-largest economy, the central bank will boost "counter-cyclical" policy adjustments to support the real economy, as per a statement.

The People's Bank of China will gradually reduce funding costs of the real economy, it went on to say.