Singapore banks prefer customer deposits to current and savings accounts

Deposits to current and savings accounts jumped 9-13 ppts over 10 years.

Deposits to the current and savings accounts (CASA) in Singapore's three largest banks has risen by 9-13ppts since 2008, according to Maybank Kim Eng.

The mix of CASA deposits rose across all three banks: DBS from 54% to 63%, OCBC from 34% to 47% and UOB from 36% to 46%. The growth comes despite SGD fixed-deposit (FD) rates rising by 10-25bps since April. OCBC and UOB raised their promotional rates whilst DBS raised its 9-12-month rates by 25-35bps.

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"[The banks] continue to prefer CASA deposits as these are typically sticky," said Maybank KE analyst Ng Li Hiang.

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Ng noted that local banks continue to pay for current deposits as they bundle or cross-sell them with other products such as credit cards (see UOB One, OCBC 360, DBS Multiplier).

"SGD loan-to-deposit ratio is the highest for UOB, at 95% vs peers’ 86-88% and the system’s 86%, based on our estimation. With higher loan demand, banks are likely to price more aggressively to compete for deposits," he added.

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