As the bullish stock market attracts bank savings, the total deposits in China's banks have seen their first monthly decline in five years.

The statistics indicate the traditional Chinese willingness to put money in banks may gradually be changing, insiders say.

A report by the People's Bank of China, the country's central bank, shows that by the end of October, Renminbi saving deposits in Chinese banks fell by 7.6 billion yuan (US$1 billion) from September.

The central bank attributed the drop to the continuous bullish performance of the stock market since the beginning of the year.

In October, the amount deposited in securities companies reached 604.2 billion yuan, up 216.1 billion yuan from the previous month and 182.9 percent from the same period last year.

Despite the monthly fall, total bank savings still increased 15.5 percent from the same period last year to 15.8 trillion yuan.

This growth rate, however, was 0.5 of a percentage point lower than the previous month, and was the slowest since April 2005, the central bank said.

Deposits have risen constantly in recent years, with the domestic consumption rate going down in the last five years and insufficient opportunities for personal investment.

China's domestic consumption rate was 61.1 percent 2001, falling to 59.8 percent in 2002, 58.2 percent in 2003, 55.5 percent in 2004, and 53.9 percent last year.

The stagnant stock market from 2001 to 2005 prompted more people to save their money in banks.

From 1993 to 2003, only 244 listed companies paid their investors dividends for three consecutive years, and every year an average of about 56 percent of listed companies in China failed to repay their investors.

China's stock market began to recover from the end of 2005 after four years of gloom, with the benchmark Shanghai Composite Index rebounding from an all-time low of 998 points to around 1,600 in just one year.

Last week, share prices on the Shanghai and Shenzhen stock exchanges reached a five-year high, driven by steel, bank and metallurgical stocks.

It is believed the recovery is mainly a result of the smooth transformation of non-tradable state-owned shares in listed firms into fully tradable shares. Most of the listed firms are restructured state-owned enterprises.

On Aug. 18, the central bank raised the one-year benchmark interest rate 0.27 of a percentage point. The news, however, failed to dampen the stock market or encourage saving.

With more channels for personal investment and a vibrant stock market, the traditional concept of putting income in banks may change.

"The public and corporations are gradually changing their fixed-term deposits into demand accounts so as to draw their money from banks more conveniently and quickly," the China Securities Journal said in a report.

(Xinhua News Agency November 15, 2006)