Smaller banks raise interest rates for deposits despite a rate cut

Smaller banks raised the interest rates for time deposits to up to 2.9 percent, as Hong Kong's interbank borrowing costs remain high after last week's rate cut.

WeLab Bank hiked the return of the six-month deposit to 2.8 percent per annum and that for the 12-month tenor to 2.9 percent. The digital bank also set the interest rate for the three-month maturity at 2.25 percent.

Another digital bank Airstar Bank increased the rate to 2.7 percent for the deposits saved in the lender for 12 months, while adding that for the three-, four- and six-month to 2.5 percent.

PAOBank, under China’s largest insurer Ping An Insurance (2318), offers a time-limited 18 percent interest rate to new individual eligible clients. It will apply to a one-month deposit for no more than HK$50,000.

Though much lower, the major lender Hongkong and Shanghai Banking Corporation moved the interest rate for the three-month tenor to 2.2 percent for Premier clients, the same as that for the six-month maturity.

For the HSBC One account, the bank only provides 2 percent for deposits of at least HK$10,000.

Bank of China (Hong Kong) (2388) set the highest interest rate for three-month deposit at 2.2 percent, four-month and six-month at 2.3 percent.

To attract new clients to its mobile banking service, BOCHK launched a time-limited offer with a 4.8 percent interest rate for a one-month deposit of no more than HK$100,000.

It came as the Hong Kong Inter-bank Offered Rate rallied, though the United States announced the long-awaited 25 basis-point cut and the local banks followed suit with a 12.5 bps reduction last week. The overnight rate, for example, jumped to 3.24 percent on September 19, 61 bps higher than one week ago.

The Fed is expected to announce two more cuts this year, and the new Governor Stephen Miran, appointed by US President Donald Trump, defended calls for steeper rate decreases.