Business

Thursday November 5, 2009

Bank deposits expected to grow 5%-8% in next six months


PETALING JAYA: Bank deposits are expected to continue to grow in the next six to 12 months, thanks to ample liquidity in the market, a high savings trend, promotional campaigns and signs of global economic recovery.

EON Bank head of wealth management and liabilities John Wong expects a 5% to 8% growth in deposits in the next six months as consumers look for “safer bets” for their capital.

According to Hong Leong Bank personal financial services chief operating officer Moey Tan, fixed deposits (FDs) are still the preferred way of savings, contributing over 60% of total industry individual deposits, thanks to various innovations and promotional activities.

“We expect growth to sustain at 5% to 6% in the next six to 12 months,” she said.

RHB Banking Group head of retail banking Renzo Viegas said retail FDs were anticipated to grow 3% this year and 4.5% next year as individual depositors were likely to place their monies with banks given that the competition from other interest-yielding instruments, such as Bon Simpanan Merdeka, Sukuk Simpanan Rakyat, Amanah Saham Malaysia, Amanah Saham Wawasan 2020 and Amanah Saham 1Malaysia, had receded.

He said banks were running promotions and offered hybrid products like tiered interest-bearing checking accounts, flexible savings accounts, higher-yield term deposits with flexibility for withdrawal and a no-frill preferred rate-savings product to cater to different customer segments.

“Convenience of transactional payments like debit cards is one form of attraction to depositors. E-deposits, via ATM or Internet, is another to cater to the busy professionals and IT-savvy depositors,” Viegas said.

Malayan Banking Bhd (Maybank) senior executive vice-president and head of consumer banking Lim Hong Tat said factors that influenced consumers’ saving patterns included interest rates as well as alternative savings and investment instruments.

“Retail customers will select the savings scheme that will provide them the best returns and/or meet their savings objectives,” he said.

Maybank’s Profit Now Account, for example, is an Islamic term deposit that has received an overwhelming response since its launch in May, registering close to RM1.6bil in new deposits.

Alliance Bank Malaysia group chief executive officer Datuk Bridget Lai said on top of the promotional activities, consumers also shifted to FDs and capital-guaranteed investments in the downturn as preserving cash and capital became priorities over pursuing aggressive returns.

Nonetheless, recent indications showed an improving risk appetite with consumers making a comeback into the equity stock market due to positive market outlook and various government stimulus packages.

CIMB Bank head of retail banking Peter England said while the conservative consumers continued to save via FDs, the growth in FDs had slowed this year with the public more interested in government-related funds and other longer-term investments like retail bonds.

CIMB’s Max InvestSave, a long-term capital-protected investment deposit product, for example, had crossed the RM100mil mark, indicating the interest in long-term products, he said.

“As at August, we have more than 10% year-on-year growth in deposits, compared with the industry level of 5.4%, and recording year-to-date growth of nearly 2%, surpassing the industry growth of 1.8%. We expect the full-year growth to exceed 5%,” England added.

AmBank (M) Bhd retail banking managing director Datuk Mohamed Azmi Mahmood concurred, adding that the industry’s growth of FD placements in August was mainly driven by corporate deposits rather than consumers.

“Growth trends for retail FDs since March to date have been subdued, versus the corresponding period last year, due to low interest rate environment. The growth in corporate deposits, in contrast, could be reflective of the better-than-expected economic conditions,” he said.

Despite low interest rates, businesses would continue to place surplus cash flow in short- to medium-term FDs for liquidity and portfolio risk management purposes, he said.

There would still be a portion of customers who would maintain and grow their FDs for prudent portfolio management strategies. Besides, deposits were guaranteed by Perbadanan Insurans Deposit Malaysia, which might not be featured in other investment classes, Azmi added.

  • E-mail this story
  • Print this story