Time deposits gain favour on higher rates
Hong Kong dollar time deposits surged almost 50 per cent year on year in July to $998.1 billion, as the more than 1 per cent interest rate differential prompted customers to switch from demand and savings deposits, according to Hong Kong Monetary Authority statistics.
Depositors who saw interest rate returns on savings accounts and one-month deposits plunge to near zero per cent earlier this year, can now enjoy saving deposit rates of 1.5 per cent, while term deposits of $10,000, tied up for one month, can earn annualised interest of up to 2.5 per cent. Some lenders even offer more than 3 per cent interest rates to lure depositors.
Sunny Cheung Yiu-tong, director and head of consumer banking at DBS Bank (HK) said: 'The trend of deposit switching and the fierce competition on deposits among Hong Kong lenders will continue.'
Hong Kong lenders' total deposits in July increased only 0.6 per cent to $3.87 trillion compared with the previous month, while Hong Kong dollar deposits grew 0.7 per cent to $2.03 trillion month on month but rose 9.5 per cent year on year.
Hong Kong dollar time deposits increased 4.4 per cent from June but surged 49.5 per cent year on year, while demand deposits fell 0.2 per cent and saving deposits dropped 3.3 per cent from June, and were down 8.7 per cent and 14 per cent year on year.
Lam Kam-yu, head of the marketing management division at the Bank of China (Hong Kong) retail banking department, said investors parked their money in deposit accounts as the property market had quietened a bit.