StockTalk(6.9): Funding costs mount for Singapore banks as deposits surge
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Singapore banks face a liquidity surplus due to a tepid lending environment and an influx of deposits from Asia's wealthy seeking a haven. DBS Group Holdings lent the Monetary Authority of Singapore S$30 billion as it could not find enough opportunities to put the money to work. Other Southeast Asian banks like UOB and OCBC also lend to MAS or place money market placements with central banks. Meanwhile, Japanese banks are seeking higher-yielding investments overseas, while Indian banks are trying to keep up with the demand for loans by hoarding deposits.
Fixed deposits surged 70% YoY to S$837bn in Q1, causing mounting pressure on funding costs. This trend is expected to continue through 2023, with UOB and OCBC potentially more vulnerable due to their higher fixed-deposit bases.
Are you currently experiencing a surge in deposits from your investments or savings, and how are you managing them? Do you think there are any practices from other countries' banks that are worth learning from? How do you think the trend of increasing deposits and mounting funding costs will impact the banking industry and consumers in Singapore in the long term?
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Stock Watch : High deposit means you are well prepared for worse to come. No worries for what may come tomorrow ( except war and illness). For investment , dump banks and bank related stocks for next couple of months. Prepare the cash for next big dip and buy during the dip.
ZnWC : Due to Fed rate hike and possible technical recession, safe haven to invest money is getting lesser. Banks is feeling the pressure to invest the money for higher return too and one way to do it is to lend to MAS.
This may result in banks reduce interest rate. If it happens, the first response is to look elsewhere for higher return and the possible choice is short term mutual fund, T-bill and short term government bond. Of course there's money market fund (or cash plus fund).
If there's not much change, people will still prefer to keep money in the bank.
s2nw2g : If SG Bank has not been diligent in getting deposits, they might face liquidity issue like the US bank. The increase cost mostly can be past down to borrower, which we can see based on their profit. Having abit extra is better than creating panic and bank run. No bank can survive bank run.
Fundamentalist : Walau hey hey
kind Dolphin_7635 : Hopefully, inflows into Singapore are not hot money!
stevenlsf1 : What you can control yourself is to diversify your investments
71519856 : The USA economic situation for sure will impact banks around the world always .