UOB unit sees end to battle for depositors
The intense battle between banks to attract deposits is expected to ease off in the
second half of the year, which will put short-term fixed-interest funds back on investors' radar screens, Vana Bulbon, chief executive officer of UOB Asset Management, said
yesterday.
"As loan growth is showing signs of slowing down, many banks don't need to aggressively increase interest rates to attract more deposits. So, short term fixed-income products should do alright for the rest of the year," he said. "The amount of savings has risen Bt430 billion from Bt6.25 trillion at the end of 2005, to reach Bt6.68 trillion. This is a huge amount to absorb from the mutual fund industry," said Vana. The loan-to-deposit ratio in the banking sector fell from 91 per cent at the end of last year to 86.4 per cent at the end of April. In the first four months of the year, banks had already jacked up interest rates for 12-month time-deposit accounts by 150 percentage points, from 2.69 per cent to 4.12 per cent on average. Kasikornbank president Prasarn Trairatvorakul previously estimated that the tough competition to attract deposits by aggressively raising rates would be over by the second half of the year. Foreign Investment Funds (FIFs) and products linked with derivatives, as well as new products, will be introduced into the market while the economy continues to slow down over the rest of the year, Vana said. The net asset value of the mutual fund industry at the end of April was 10 per cent higher than the Bt775-billion level at the end of 2005, at Bt856 billion. UOB Asset Management has Bt55 billion in assets under management and aims to achieve Bt75 billion by the end of the year. It plans to launch another FIF in the final quarter of the year. In the meantime, it will launch some 20 funds, most of which will be fixed-income funds. The company yesterday launched two funds: the fixed-income Secure 6/1, and the derivatives-linked Select SET50/1. The former has six-months' maturity, while the latter has a maturity of one-year. Korawut Leenabanchong, chief investment officer of the firm, said if the general election did take place on October 15, the sentiment in the Thai capital market would improve. He recommends stocks in the health, entertainment and energy sectors. Piyarat Setthasiriphaiboon The Nation
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