Malaysian banks scrambling to shore up deposit bases

Narrower margins are the consequences.

Malaysian banks have been actively competing for deposits since 2Q14 in anticipation of a rate hike, which materialised in July 2014.

According to a research note from Nomura, since then, the sector continues to offer attractive rates to shore up their deposit base and fund loan growth, resulting in narrower margins.

Public Bank, AmBank and RHB Bank have relatively higher quoted board rates compared to Maybank, which is the leading consumer deposit franchise in Malaysia.

Their rates are 15-25bp higher for the 12-month deposit, with RHB Bank offering the highest rate at 3.45%.

Here's more from Nomura:

The banks are actively campaigning for new consumer deposits and offer promotional rates that are effectively between 50-270bp above their quoted board rates.

The most aggressive here was HSBC Malaysia, which is offering 5.88% for its premier banking customers (with deposits of at least
MYR200k), but this is for a maximum tenure of 2 months only and subject to a cap of MYR300K.

RHB Bank’s deposit product is also fairly attractive with effective rates of 4.2% for new deposits of at least MYR100K (4.4% for new deposits above MYR600K).

CIMB Bank appeared to be the least aggressive of the lot, with promotional (effective) rates of just 3.33%.

To qualify for the higher promotional rate of 3.75%, one would need to put in a minimum deposit of MYR1mn.