Standard Chartered PLC is offering short-term deposit rates of as high as 10% to attract Chinese customers. Select customers in the Wealth Management Connect program can exchange yuan to U.S. dollars with funds equivalent to HK$100,000 or more and earn a preferential rate of 10% per annum for a one-month time deposit [fb1e7cab].
This move by Standard Chartered comes as Hong Kong banks engage in a battle for deposits due to tightened liquidity rules. The Hong Kong Monetary Authority (HKMA) has increased the required reserve ratio for banks, leading to a shortage of liquidity in the market. In response, banks are offering higher interest rates to attract deposits [254c8c73].
The high deposit rates offered by Standard Chartered are aimed at drawing mainland Chinese cash. The bank is targeting customers in the Wealth Management Connect program, which allows them to exchange yuan to U.S. dollars. To qualify for the preferential rate of 10% per annum, customers must have funds equivalent to HK$100,000 or more and deposit them in a one-month time deposit [fb1e7cab].
Standard Chartered's move is part of its efforts to tap into the growing wealth of mainland Chinese customers. The bank has been expanding its presence in China and has been granted licenses to operate wealth management and securities businesses in the country. By offering attractive deposit rates, Standard Chartered aims to attract more mainland Chinese customers and strengthen its position in the market [fb1e7cab].
In addition to the high deposit rates, Standard Chartered has announced a record share buy-back program. The bank reported a 15% increase in second-quarter pre-tax profit to US$1.8 billion, beating analysts' estimates of US$1.6 billion. As a result, Standard Chartered plans to repurchase a record US$1.5 billion of shares. The bank's net interest income for the three months to June rose 6% to US$2.6 billion, and its net interest margin grew to 1.93% compared to 1.71% a year earlier. The bank's wealth unit grew 25% year on year to US$618 million, with net new sales more than doubling to US$13 billion and wealth assets under management reaching US$135 billion. Following the announcement, Standard Chartered's stock price rose 3.7% to HK$76.00 [c873e874].