Business

Thursday November 5, 2009

Higher deposit rates for selected products

By YEOW POOI LING


PETALING JAYA: Banks are offering higher deposit rates for selected promotional products as part of efforts to attract more customers.

“Banks have to fight for deposits by offering more attractive rates as deposits in current accounts of exporters have declined with the export market in the doldrums,” a head of research said, adding that targeted segments include pensioners and senior citizens.

Datuk Mohamed Azmi Mahmood ... ‘AmBank has targeted depositors with promotions and innovative products.’

Previously, banks could depend on exporters’ receivables as deposits but the global economic downturn had slowed down trade activities. Banks that received less deposits would have to rely on the interbank market for funds, which could put more risk to the balance sheet, he said.

Nevertheless, the deposit rates were revised marginally by small percentage points with certain terms and conditions, hence the changes were not obvious, the head of research said.

Meanwhile, the current mortgage rates were “too low for the banks’ own good as they’re underpricing the risk,” he said, adding that there could still be risk to the economic recovery.

A banking analyst said the stiff competition had compelled banks to offer higher rates for different promotional products to attract more depositors. “As lending activities increase, banks would also have to increase their source of funds,” she said.

AmBank (M) Bhd retail banking managing director Datuk Mohamed Azmi Mahmood told StarBiz in an email that growing deposits were critical to the group’s strategy to maintain cost of funds at competitive levels.

“So far, we have successfully engaged our depositors through targeted campaigns and promotions and innovative bundling of financial products and services,” he said.

For example, the bank’s Am50Plus fixed deposit (FD) account, targeted at those aged 49 years and above, offers an annual 2.55% for 12 months with minimum saving of RM5,000, which is much higher than conventional FD rate of 2.5% per annum for the same period.

Meanwhile, CIMB Bank AirAsia Savers Account, launched in April, is an online product that offers rates of up to 2% a year plus a chance to bid for free flights and enjoy other travel benefits.

Peter England ... ‘CIMB attracted 10,000 new account holders in the first month of the AirAsia Savers launch

CIMB Bank head of retail banking Peter England said the offering attracted over 10,000 new account holders in the first month of its launch.

In August, the bank introduced the Big Plus For 50 Plus package for account holders above age 50, which comprises a Golden Time FD account and a Senior Savings Account, which gave them the flexibility to have their FD interest credited to their savings account on a monthly basis.

EON Bank Bhd’s SaveMonthly account, in contrast, gives higher interest when depositors take up a monthly savings plan of at least RM100 per month.

For example, a monthly saving of RM100 to RM500 would earn an additional 0.2% a year, on top of the base interest rate of 0.25% for maximum account balance of RM5,000.

Head of wealth management and liabilities John Wong said this account would help consumers to consistently and systematically save a specific amount every month and grow savings base at a higher interest rate.

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