Some Malaysian banks are getting aggressive with consumer deposit campaigns

Promo rates are even being offered.

It has been observed that some Malaysian banks are actively campaigning for new consumer deposits and offer promotional rates that are effectively between 50-270bp above their quoted board rates.

According to a research note from Nomura, banks that have been more aggressive with consumer fixed deposit gathering are those with high LD ratios.

Banks like Hong Leong, CIMB and Alliance Bank whose LDRs are below the industry average show the least attractive deposits rates.

As all the banks have been guiding that they are compliant with the Basel III Liquidity Coverage Ratio guidelines, Nomura believes these deposit campaigns are mainly to source for liquidity required to fund their consumer loans growth.

Here's more from Nomura:

The recent July ’14 rate hike of 25bp which boosted margins also afforded the banks an extra buffer to compete for deposits.

At present, Public Bank and RHB have the fastest growth in mortgages at 14% and 23% respectively, compared to the industry average of 14%.

Interestingly, the gap between the promotional rates and the mortgage lending rates is a mere 40bp, suggesting that NIM pressure is expected to persist for the rest of the year.