Competition heats up between local and foreign banks for SGD deposits

DBS and UOB  saw declining deposits in 2Q as foreign banks lure depositors with more attractive rates.

DBS and UOB saw some S$ deposit outflow in 2Q12 of around 9.5% qoq and 2.3% qoq, respectively. DBS responded by increasing time deposit rates to match the industry. CIMB think that this could be a signal of intensifying deposit competition, with banks competing on rates and enhancing customer experience to improve deposit stickiness. This could add to further NIM pressure in the near term, it said.

Here's more from CIMB:

Foreign banks ANZ and ICICI have been attempting to capture deposit share with attractive fixed deposit rates.
Standard Chartered has also been very aggressive in attracting CASA deposits with its Bonus saver plan which
offers 1.88% p.a. (with certain conditions). Compare this to the 0.05-1.5% offered by local banks. The local banks never had to meet the QFBs’ deposit rates because their extensive branch/ATM network had been an attraction. In a sustained low interest rate environment and in a world of increasingly cashless transactions, that advantage is ebbing.