While the recent increase in deposit rates will see some attrition in CASA deposits, NIM should expand over the next few quarters, bolstered by the sharp rise in interest rates since March, says RHB. “Banks with strong CASA deposits would also better withstand the rise in deposit rates,” write analysts in a Sept 22 note.
Could Singapore’s digital banks stoke competition over deposits? RHB Group Research analysts maintain “overweight” on the Singapore banking sector, noting that incumbents with strong current account savings account (CASA) deposits will fare better.
Digital banks are gathering at the starting line, having first received their licences in December 2020. According to RHB analysts, attractive savings account offerings may stoke concerns that deposit competition would intensify, exerting pressure on incumbent banks’ net interest margins (NIM).
