Banks innovate to woo cheaper deposits

Stanchart CEO Moathodi Lekaukau
Stanchart CEO Moathodi Lekaukau

With the prevailing tight liquidity in the banking system pushing up cost of sourcing loanable funds, commercial banks are crafting innovative products to attract cheaper deposits.

As the liquidity dearth heightened in the past year, commercial banks have found themselves paying astronomical interest rates to attract funds, a cost that is chomping into their profit figures. For the full year to June 2015, FNBB saw its interest expenses rise by 43 percent, largely due to high deposits rates paid to professional funders.

While the bank’s top line interest earnings registered a modest four percent rise to P1.29 billion, a mammoth 43 percent rise in interest expenses induced by the tight liquidity effected a P415 million dent on net interest income.

Editor's Comment
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