Commercial banks must be innovative to lure deposits, SCB exec ...

Home ? business ? Commercial banks must be innovative to lure deposits, SCB exec says

FIGHTING FOR FUNDS

SUCHEERA PINIJPARAKARN
THE NATION October 2, 2012 1:00 am

Marketing their products on price is difficult for commercial banks because they had to pay the 0.46-per-cent fee to the FIDF as well as 0.01 per cent to the Deposit Protection Agency (DPA) midyear and will pay again at year-end, said Smith Banomyong, executive vice president of Siam Commercial Bank (SCB).

He said the state-owned banks had offered features with deposit products to attract customers. For savings deposits, depositors of state-owned banks are not required to pay withholding tax even if they earn interest higher than Bt20,000, unlike the policy for commercial banks.

The state-run Bank for Agriculture and Agricultural Co-operatives promoted new 16-month fixed deposits with an interest rate of 4 per cent per annum. The average interest is 3.4 per cent per annum, and the minimum investment required is only Bt50,000, with depositors not required to pay the withholding tax.

For SCB, innovation is the key strategy to attract customers, Smith said. Yesterday it introduced a 12-month fixed-deposit product to lure self-employed customers.

The bank wants to attract new depositors, especially business owners who want the flexibility of withdrawing cash from a fixed-deposit account without fee payment for up to 60 days and receiving interest of 3 per cent per annum. The minimum required deposit is Bt500,000 and the maximum Bt50 million.

He said the bank aimed for the new product to attract Bt40 billion in deposits by the end of the year, half from new self-employed customers. Currently the bank serves 40,000-50,000 self-employed customers out of a total 100,000 affluent clients.

SCB defines an affluent customer as a person who has assets under management of Bt3 million and above.

SCB this year targets deposit growth of 20 per cent or Bt240 billion. The bank mobilised deposits of Bt180 billion in the first nine months.

Smith said the competition for deposits remained furious because of high lending growth, while of bills of exchange had been made unattractive by the requirement for payment of the same DPA premiums as deposits. Net growth of deposits this year has only been 3-4 per cent compared with 13-14 per cent in lending growth.

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Source: http://www.nationmultimedia.com/business/Commercial-banks-must-be-innovative-to-lure-deposi-30191491.html

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