https://www.channelnewsasia.com/singapore/uob-raises-promotional-interest-rates-fixed-deposits-high-3-2982381
2022-10-03
UOB raises promotional interest rates for fixed deposits to as high as 3%
This latest move means that interest rates on fixed deposits in Singapore have hit their highest in almost 24 years.
UOB raises promotional interest rates for fixed deposits to as high as 3%
File photo of the UOB bank building in Singapore on Aug 29, 2019. (Photo: AFP/Roslan RAHMAN)
Tang See Kit
Tang See Kit
03 Oct 2022 03:23PM (Updated: 03 Oct 2022 05:59PM)
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SINGAPORE: United Overseas Bank (UOB) on Monday (Oct 3) raised its promotional interest rates for Singapore-dollar fixed deposits to as high as 3 per cent per annum for a 15-month duration.
This is up from last month’s promotional rate of 2.8 per cent.
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The bank, Singapore’s third-largest lender, is also offering a higher rate of 2.9 per cent for a 12-month fixed deposit, up from 2.6 per cent.
Its 10-month promotion is going at 2.8 per cent, up from 2.4 per cent previously.
Customers will have to put in fresh funds of at least S$20,000 to enjoy the latest promotional rates.
A fixed deposit, otherwise known as a time or term deposit, allows one to earn a guaranteed amount of interest for a lump sum of money deposited with a bank over a specified duration.
Unlike regular savings accounts, customers cannot withdraw this money before the so-called “lock-in” duration is over - or they risk paying a penalty or losing the interest earned.
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Banks here have been dangling increasingly juicy deals for fixed deposits in recent months, as central banks around the world hike interest rates.
The latest move by UOB means that the interest rate on 12-month fixed deposits has hit its highest in almost 24 years.
The last time interest rates on 12-month fixed deposits went above 2.9 per cent – UOB’s current promotional rate – was in November 1998, when the rate stood at 3.11 per cent, according to data from the Monetary Authority of Singapore.
That same month, three-month and six-month fixed deposit rates hit 2.95 per cent and 3.05 per cent respectively. The data from MAS does not track rates for 15-month fixed deposits.
For most of the past 20 years, fixed deposit rates in Singapore have been stuck below 1 per cent.
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Recent revisions by lenders are part of a “natural progression with rising loan rates and inflation”, an expert had earlier told CNA.
“Banks are looking to improve visibility of their cost of funds and duration amidst further expected interest rate hikes,” said Maybank Securities’ head of research in Singapore Thilan Wickramasinghe.
Foreign banks are usually more aggressive in jostling for deposits as their smaller deposit bases mean they need to balance liquidity and cost of funding visibility in a rising rate environment.
But in light of stiff competition, domestic banks, which enjoy a large pool of funds from domestic customers and seldom dole out attractive offers, have also had to ramp up their game.
“The domestic banks have larger deposit bases however, they will also need to be nimble and respond to competition in order to defend market share,” said Mr Wickramasinghe.
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UOB has been among the more aggressive of the banks, adjusting its fixed-deposit promotions monthly and offering one of the highest rates across a variety of tenor options so far.
The bank said its fixed deposit volume tripled in September, compared with the month before.
“Given the persistent high interest rate climate, we have decided to further increase our promotional fixed deposit rates, to present our customers a safe, principle-protected hedge against inflation and volatility,” said the UOB’s head of group personal financial services Jacquelyn Tan.
The bank on Monday also raised promotional interest rates for customers with privilege accounts, from 1.9 per cent in September to 2.3 per cent for fresh fund deposits of between S$200,000 to S$3 million.
Source: CNA/sk(jo)
Related Topics
personal finance interest rate UOB
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