reporter2
20-01-15, 11:33
http://www.businesstimes.com.sg/banking-finance/deposit-rates-slow-to-catch-up-even-as-3-mth-sibor-advances
Deposit rates slow to catch up even as 3-mth Sibor advances
But risk-averse customers feel safer leaving money in banks even at low rates; SGS demand also up on fear of losses
By Siow Li Sen
[email protected]@SiowLiSenBT
19 Jan
INTEREST rates for borrowers may have shot up but savers will have to wait a while more before enjoying significant jumps in deposit rates. INFOGRAPHIC: Climbing
The key 3-month Sibor or Singapore interbank offered rate (typically used to price home loans) has risen almost 60 per cent to 0.64 per cent from 0.41 per cent barely three months ago last October. On the flip side, banks have been slow to raise deposit rates - which is expected since the gap constitutes its gross profit.
Maybank has not jacked up its fixed deposit (FD) rates since October though it has sweetened them with a free gift for big savers. Its 12-month FD rates are 1.10 per cent for amounts between S$25,000 to less than S$50,000 and 1.35 per cent for funds higher than S$50,000.
To celebrate the new year, the bank is offering customers a six-piece Corningware set when they place a minimum of S$150,000 for 24 months, said Choong Wai Hong, Maybank Singapore's head of community financial services.
OCBC Bank has increased its 12-month FD rate to 1.3 per cent for a minimum of S$20,000 fresh funds for its mass clients. For premier customers who put away at least S$50,000, they enjoy 1.32 per cent.
The 12-month FD rates have been increasing periodically, said an OCBC Bank spokesman. Last September, the rates were 1 per cent (mass) / 1.08 per cent (premier), he said. OCBC also offers a savings product which pays bonus interest rates if there are top-ups and no withdrawals within the same quarter.
At United Overseas Bank, for a promotional 13-month tenor, a depositor will get 1.10 per cent per annum with a minimum deposit of S$20,000, up from 1.08 per cent in 2014.
Despite the marginal increases in promotional rates, savers continue to stash away their money as many customers remain risk-averse.
Dennis Khoo, UOB's head of personal financial services for Singapore, said UOB has been experiencing consistent deposit growth. Last September, UOB customer deposits had grown 8.7 per cent year-on-year.
"In Singapore, deposits growth is driven by a range of promotional interest rates being offered for selected products such as the SGD time deposit, savings account and foreign currency time deposit," said Mr Khoo. "In this market, a significant portion of UOB customers' assets are in fixed deposits, savings and current accounts."
Philip Lim, ANZ's head of retail banking Singapore, added: "Despite interest rates being historically low over the last few years, savings and fixed deposits continue to be popular as these provide almost instant liquidity and are the safest form of investment."
Additionally, Singdollar deposits of non-bank depositors are covered up to S$50,000 by a deposit insurance scheme, he said.
Savings and FDs typically constitute from 30 per cent to as high as 70 per cent of investors' portfolios, depending on the investment environment, said Mr Lim. "Not everyone is willing to risk their money in stocks, property investment or other investments involving risk," he said.
ANZ offers a Chinese New Year promotional rate of 1.38 per cent for a nine-month FD of at least S$150,000.
The fear of investment losses has also driven up demand for Singapore Government Securities (SGS), where yields for the key 10-year bond have crashed below 2 per cent.
Demand from shell-shocked investors caused the yield of the 10-year SGS to fall to 1.80 per cent last Friday, as the price rose to 110.58 following Thursday's move by the Swiss central bank to scrap its currency cap. Bond yields fall as prices rise and vice versa. An investor of the 10-year 3 per cent SGS bond which matures in 2024 would have made 4 per cent since the beginning of 2015, or in a little less than three weeks.
"AAA bonds rallied as yields slumped," said Saktiandi Supaat, Maybank's head of FX research. SGS have an AAA rating, the highest possible rating.
UOB interest rate strategist Victor Yong said falling yields and demand for SGS are due to a few factors: tracking of the falling US Treasury (UST), and also being regarded as a safe-haven asset. "Within Asia, there are reasons to prefer the SGD - we are the safe haven in Asia," said Mr Yong.
DBS economist Eugene Leow said the decline in 10-year SGS yields is largely driven by the continued plunge in 10-year UST yields.
"10Y UST yields have effectively given back all of their taper tantrum gains and are approaching all-time lows. The unabated drop in oil prices is the key factor behind the sharp rise in prices for USTs," said Mr Leow. "While bullish sentiment for bonds is likely to persist in the short term, yields are more likely to be biased higher over the medium term when global price pressures start to build again," he said.
Investors can buy secondary market SGS via banks with a minimum amount of S$1,000. OCBC Bank does not charge customers buying secondary SGS a fee or commission, said Tan Siew Lee, its head of wealth management Singapore.
Deposit rates slow to catch up even as 3-mth Sibor advances
But risk-averse customers feel safer leaving money in banks even at low rates; SGS demand also up on fear of losses
By Siow Li Sen
[email protected]@SiowLiSenBT
19 Jan
INTEREST rates for borrowers may have shot up but savers will have to wait a while more before enjoying significant jumps in deposit rates. INFOGRAPHIC: Climbing
The key 3-month Sibor or Singapore interbank offered rate (typically used to price home loans) has risen almost 60 per cent to 0.64 per cent from 0.41 per cent barely three months ago last October. On the flip side, banks have been slow to raise deposit rates - which is expected since the gap constitutes its gross profit.
Maybank has not jacked up its fixed deposit (FD) rates since October though it has sweetened them with a free gift for big savers. Its 12-month FD rates are 1.10 per cent for amounts between S$25,000 to less than S$50,000 and 1.35 per cent for funds higher than S$50,000.
To celebrate the new year, the bank is offering customers a six-piece Corningware set when they place a minimum of S$150,000 for 24 months, said Choong Wai Hong, Maybank Singapore's head of community financial services.
OCBC Bank has increased its 12-month FD rate to 1.3 per cent for a minimum of S$20,000 fresh funds for its mass clients. For premier customers who put away at least S$50,000, they enjoy 1.32 per cent.
The 12-month FD rates have been increasing periodically, said an OCBC Bank spokesman. Last September, the rates were 1 per cent (mass) / 1.08 per cent (premier), he said. OCBC also offers a savings product which pays bonus interest rates if there are top-ups and no withdrawals within the same quarter.
At United Overseas Bank, for a promotional 13-month tenor, a depositor will get 1.10 per cent per annum with a minimum deposit of S$20,000, up from 1.08 per cent in 2014.
Despite the marginal increases in promotional rates, savers continue to stash away their money as many customers remain risk-averse.
Dennis Khoo, UOB's head of personal financial services for Singapore, said UOB has been experiencing consistent deposit growth. Last September, UOB customer deposits had grown 8.7 per cent year-on-year.
"In Singapore, deposits growth is driven by a range of promotional interest rates being offered for selected products such as the SGD time deposit, savings account and foreign currency time deposit," said Mr Khoo. "In this market, a significant portion of UOB customers' assets are in fixed deposits, savings and current accounts."
Philip Lim, ANZ's head of retail banking Singapore, added: "Despite interest rates being historically low over the last few years, savings and fixed deposits continue to be popular as these provide almost instant liquidity and are the safest form of investment."
Additionally, Singdollar deposits of non-bank depositors are covered up to S$50,000 by a deposit insurance scheme, he said.
Savings and FDs typically constitute from 30 per cent to as high as 70 per cent of investors' portfolios, depending on the investment environment, said Mr Lim. "Not everyone is willing to risk their money in stocks, property investment or other investments involving risk," he said.
ANZ offers a Chinese New Year promotional rate of 1.38 per cent for a nine-month FD of at least S$150,000.
The fear of investment losses has also driven up demand for Singapore Government Securities (SGS), where yields for the key 10-year bond have crashed below 2 per cent.
Demand from shell-shocked investors caused the yield of the 10-year SGS to fall to 1.80 per cent last Friday, as the price rose to 110.58 following Thursday's move by the Swiss central bank to scrap its currency cap. Bond yields fall as prices rise and vice versa. An investor of the 10-year 3 per cent SGS bond which matures in 2024 would have made 4 per cent since the beginning of 2015, or in a little less than three weeks.
"AAA bonds rallied as yields slumped," said Saktiandi Supaat, Maybank's head of FX research. SGS have an AAA rating, the highest possible rating.
UOB interest rate strategist Victor Yong said falling yields and demand for SGS are due to a few factors: tracking of the falling US Treasury (UST), and also being regarded as a safe-haven asset. "Within Asia, there are reasons to prefer the SGD - we are the safe haven in Asia," said Mr Yong.
DBS economist Eugene Leow said the decline in 10-year SGS yields is largely driven by the continued plunge in 10-year UST yields.
"10Y UST yields have effectively given back all of their taper tantrum gains and are approaching all-time lows. The unabated drop in oil prices is the key factor behind the sharp rise in prices for USTs," said Mr Leow. "While bullish sentiment for bonds is likely to persist in the short term, yields are more likely to be biased higher over the medium term when global price pressures start to build again," he said.
Investors can buy secondary market SGS via banks with a minimum amount of S$1,000. OCBC Bank does not charge customers buying secondary SGS a fee or commission, said Tan Siew Lee, its head of wealth management Singapore.