Not all banks cutting rates on flagship savings accounts

While demand for loans is slowing, some still see benefits in building up their deposit bases

- Chor Khieng Yuit

Loan demand is slowing, but not all banks here are cutting interest rates on their flagship savings accounts just yet as they still see benefits in building up their deposit bases.

Some are also diversifying into other sources of revenue to supplement the interest income they get from lending.

The moves come amid expectations of fewer interest rate cuts in the US. Markets are now expecting two cuts in September and December, down from three cuts a month ago.

Monetary Authority of Singapore data shows that loans and advances by commercial banks to businesses and consumers fell 0.3 per cent in February 2024 from February 2023. Business loans were down 0.7 per cent from February 2023, while consumer lending rose 0.4 per cent.

"Loans have stagnated quite a bit. It is quite flat," said Mr Glenn Thum, research analyst at Phillip Securities Research.

UOB, which was among the more aggressive of the banks when interest rates began soaring in mid-2022, became one of the first to start trimming.

Its flagship UOB One account was paying out as much as 7.8 per cent for balances of up to $100,000 in December 2022, but that was cut on May 1, 2024, to between 3 per cent and 4.5 per cent.

Mr Thum said UOB realised it had "taken on too much deposits" and was "paying way too high" for them, while it was not able to lend out all the money.

Standard Chartered Bank (StanChart) was another bank with high rates its Bonus$aver account was paying up to 7.88 per cent in January 2023.

It cut the maximum rate to 7.68 per cent on May 1.

But it did raise the bonus interest earned on the invest and insure portions, while cutting the bonus interest earned in the salary credit and spend components.