UOB raises promotional interest rates for fixed deposits to as high as 3%
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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.
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This is up from last monthâs promotional rate of 2.8 per cent.
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The bank, Singaporeâs 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.
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Its 10-month promotion is going at 2.8 per cent, up from 2.4 per cent previously.
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Customers will have to put in fresh funds of at least S$20,000 to enjoy the latest promotional rates.
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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.
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Unlike regular savings accounts, customers cannot withdraw this money before the so-called âlock-inâ 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.
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The latest move by UOB means that the interest rate on 12-month fixed deposits has hit its highest in almost 24 years.
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The last time interest rates on 12-month fixed deposits went above 2.9 per cent â UOBâs current promotional rate â was in November 1998, when the rate stood at 3.11 per cent, according to data from the Monetary Authority of Singapore.
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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.
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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 ânatural progression with rising loan rates and inflationâ, an expert had earlier told CNA.
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âBanks are looking to improve visibility of their cost of funds and duration amidst further expected interest rate hikes,â said Maybank Securitiesâ head of research in Singapore Thilan Wickramasinghe.
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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.
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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.
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âThe domestic banks have larger deposit bases however, they will also need to be nimble and respond to competition in order to defend market share,â 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.
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The bank said its fixed deposit volume tripled in September, compared with the month before.
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âGiven 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,â said the UOBâs head of group personal financial services Jacquelyn Tan.
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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.Â
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UOB raises promotional interest rates for fixed deposits to as high as 3%. (2022, October 3). CNA. Retrieved October 4, 2022, from https://www.channelnewsasia.com/singapore/uob-raises-promotional-interest-rates-fixed-deposits-high-3-2982381