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Singapore’s highest deposit rates in 24 years spark long waits

Singapore bank customers are enduring hours-long waits as they race to lock in the highest interest rates on fixed deposits in 24 years,
UOB has seen a 23% year-to-date growth in its fixed deposit portfolio and may extend its promotional rates beyond September. (PHOTO: Lauryn Ishak/Bloomberg)

By Natalie Choy and Joyce Koh

(Bloomberg) — Singapore bank customers are enduring hours-long waits as they race to lock in the highest interest rates on fixed deposits since the end of the Asian financial crisis almost 24 years ago.

Several lenders in the city-state are dangling promotional interest rates as high as 2.8% on Singapore dollar fixed deposits for 24-month terms, surpassing the 2.6% return on Singapore Savings Bonds.

The interest rate on 12-month fixed deposits is currently as high as 2.75%. It was last above that in November 1998, according to Monetary Authority of Singapore data, and the rate has been stuck below 1% for most of the past 20 years.

United Overseas Bank Ltd., the country’s third largest bank, put up a notice at its branch in the central business district warning of a two-hour wait due to “a surge in customers.” It also imposed a limit of five fixed deposit placements per customer, checks by Bloomberg News on Wednesday showed.

Jia Jia, 37, had 79 customers ahead of her when she tried to open a UOB fixed deposit account for her parents during her lunch break.

“My parents are not very savvy, so I think this is the safest place to put their money at the moment since interest rates are also at their highest in recent years,” she said. “I think stocks are very volatile and don’t know too much about bonds.”

The banks’ offers, which come as central banks around the world hike interest rates, look all the more attractive in the current investing environment, which has seen depressed returns from assets such as equities and cryptocurrencies.

“I don’t have to worry about the ups and downs of the stock market. I know what I’m getting for sure,” said Doris Teo, 73, a retired nurse who was shopping for a fixed deposit package.

RHB Bank Bhd. currently offers the highest rate of 2.8% for a minimum placement of S$20,000 for 24 months, meaning a premier customer who deposits S$100,000 could earn S$5,600 in interest in two years. At Hong Leong Bank Bhd., a 2.75% rate is offered on a deposit of at least S$50,000 for 12 months.

Local lenders UOB and Oversea-Chinese Banking Corp. have raised rates to as much as 2.6% and 2.3% respectively for a 12-month term, while DBS Group Holdings Ltd., the nation’s largest bank, maintained its highest rate of 1.3%.

UOB has seen a 23% year-to-date growth in its fixed deposit portfolio and may extend its promotional rates beyond September to meet demand, a bank spokesperson told Bloomberg News.

“With Singapore’s inflation rate hitting higher levels than before, customers will see a bigger erosion of their cash value over time, and want to ensure the value of their savings can keep up with inflation,” said OCBC’s head of deposits Na Kok Peng. Demand for 12-month tenors at the lender grew 60% in August from July, and close to 150% from June, he said in response to queries.

Rates Elsewhere

Still, rates in the Southeast Asian nation lag some of its regional peers. Public Bank Bhd. customers in Hong Kong can earn up to 2.9% on a 12-month deposit.

Australia’s big four banks have raised deposit rates by 250 basis points to 2.83%, on average, since January, according to Bloomberg Intelligence. Australia & New Zealand Banking Group, National Australia Bank Ltd. and Westpac Banking Corp. have all increased their 12-month deposit rate to 3%. Smaller lenders’ rates in Australia are 90 basis points higher at 3.73% on average as they compete for market share.

In India, depositors can earn as much as 6.25% on a 12-month placement.

©2022 Bloomberg L.P.