[SINGAPORE] If you are a saver, things are starting to look up.
In recent weeks, banks have stepped up their deposit promotions in their attempts to court those who have received their bonus payouts, and to poach savers from rival banks.
Though such promotions are a seasonal event, this year's drive is taking on greater urgency, given that deposits have plunged precipitously even as interest rates have begun creeping up.
In November, the latest month for which official data is available, growth in fixed deposits fell into negative territory.
To stem the slide, banks have stepped up their promotions.
Even DBS, the biggest bank here, has, for the first time, offered top-up rates for its most popular savings account, paying an effective interest rate of 0.52 per cent, against the 0.05 per cent for its regular savings account.
Besides offering slightly higher interest rates, banks are also wooing savers with giveaways such as gold-plated animal figurines or upfront cash.
Philip Lim, ANZ Singapore's head of retail banking, said: "We find that the Chinese New Year period, being so near the start of the calendar year, tends to be a time when people take stock of their financial standing and consider the savings and investment opportunities available in the market."
The rise in rates has been tiny so far. The key three-month Sibor (Singapore interbank offered rate) has risen to 0.40503 per cent since Jan 15, a 52-week high, up from a low of 0.37083 last April.
It is why growth in deposits continues to shrink, plunging to 4.4 per cent last November year on year (y-o-y), from 8.3 per cent y-o-y last January, said the Monetary Authority of Singapore.
Deposits in banks are made up of three components - savings, demand deposits and fixed deposits.
Savings and demand deposits are still growing at a decent clip, but growth in fixed deposits, the largest single component, has fallen into negative territory.
On the other hand, loans in November grew 17.4 per cent y-o-y.
Last week, DBS launched a promotion for its most popular deposit account, which pays regular savers a top-up rate of 1.764 per cent in addition to the base rate of 0.25 per cent for those who save $1,000 every month.
Tok Geok Peng, DBS' senior vice-president for consumer deposits, said: "MySavings Account (MSA) is our most popular deposit account as customers can save on a regular basis and enjoy higher yield on their savings.
"The majority of MSA account holders are between 30 and 45 years old and female," she noted.
For someone who saves $1,000 a month, the interest at the end of 12 months could be as much as 10 times that of a regular savings account, she said.
United Overseas Bank (UOB), which offered a 999.9 gold-plated horse figurine (worth $238) for deposits of $350,000, said its stock of horses has been fully redeemed.
OCBC Bank increased the interest rate for its 12-month fixed deposit to 1.1 per cent for $20,000 (from 1.08 per cent) and 1.18 per cent for $200,000 (up from 1.10 per cent).
Ling Seng Chuan, the bank's head of deposits, said the promotional interest rates are higher because the competition for deposits is keener, especially during the Chinese New Year festive period.
ANZ's 12-month fixed deposit for $150,000 pays 1.10 per cent as well as a cash gift of $160, giving an effective interest rate of 1.21 per cent.
Analysts expect the competition for funds to intensify through the year, given that deposits are falling and loans are growing in double-digit terms.
Kenneth Ng, CIMB's research head, said: "The trend of low deposit growth is due to the fact that with low rates, savings are going into other assets (bonds, Reits, property)."
As at end-September 2013, the Singapore dollar loan-to-deposit ratio (LDR) was 73 per cent for DBS, 84 per cent for OCBC and 92 per cent for UOB.
Rising LDRs will mean funding pressure ahead, said Mr Ng.
Still, it does not mean that the banks rely only on customer deposits to fund loan growth. Local banks have stepped up their borrowings via the US commercial paper market. Commercial paper refers to short-term bonds of less than 12 months' duration.
"So we shouldn't be too fixated on the pure loan-to-deposit ratios," said one analyst.