BIZ BUZZ: Sky-high deposit rates flagged

The Bangko Sentral ng Pilipinas (BSP) is keeping a close eye on banks that have been dangling jaw-dropping deposit rates to reel in more savers.

And reeled in, they have.

High-ranking BSP officials recognize risks from the sustainability of these sky-high yields. Sure, they’re working like a charm for now, but how long can these banks keep this up?

Global credit watcher Fitch Ratings earlier noticed the same thing: While these juicy promos are shaking up the playing field and forcing smaller traditional banks to go full throttle on digital-only peers, don’t expect those rates to stick around forever.

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Still, the strategy is clearly paying off. BSP data show that digital banks, which sometimes offer promotional rates of more than 7 percent per annum, racked up P102.3 billion in deposits by end-March—up a whopping 33.2 percent from last year. Compare that with the modest 5.8-percent growth in deposits (albeit coming from a larger base) across the entire banking system, which now stood at P20.2 trillion.

One thing’s for sure: competition in this space is heating up. Stay tuned.