Latest news with #termDeposits
Arab News
22-05-2025
- Business
- Arab News
Savings deposits hit highest share in 16 years as Saudi money supply climbs to $815bn
RIYADH: Saudi banks' money supply rose 8.22 percent year on year to SR3.06 trillion ($815 billion) in March, driven by a sharp surge in time and savings deposits, recent data showed. According to figures by the Saudi Central Bank, also known as SAMA, this category increased by 27.55 percent during the period to reach SR1.07 trillion, the greatest growth rate in over 14 months. It now accounts for 35.2 percent of the total money supply, marking its highest share in 16 years. This notable shift reflects changing behavior among depositors, increasingly favoring interest-bearing accounts amid ongoing global monetary tightening. While the US Federal Reserve kept rates steady in recent months following 100 basis points of cuts last year, the risk of renewed inflation, partly due to rising import tariffs, may have delayed further easing. Given that SAMA typically mirrors Fed rate decisions to maintain the riyal's dollar peg, this has reinforced the appeal of yield-generating instruments like term deposits among Saudi savers. Term deposits, which offer higher returns than conventional bank accounts in exchange for holding funds over a fixed period, have become more attractive to Saudi savers seeking to lock in interest income amid volatile economic signals. Despite this surge, demand deposits, accounts that allow immediate access to funds, still hold the largest share at 47.84 percent, or SR1.46 trillion. However, this marks their lowest proportion in nearly five years. Growth in this category slowed to 3.9 percent year on year, reflecting a broader migration toward savings products. Meanwhile, quasi-money deposits, which include foreign currency deposits and marginally liquid instruments, declined by 22.85 percent to SR266.87 billion, representing 8.73 percent of the total. Currency outside banks rose by 10.57 percent to SR251.53 billion. Credit to businesses in the Kingdom has witnessed robust growth in recent quarters, underpinned by increased demand from key sectors such as real estate, construction, manufacturing, and broader non-oil economic activities. According to data from SAMA, corporate lending grew by over 22 percent year on year in March, reflecting the banking sector's critical role in financing Vision 2030-linked projects and supporting economic diversification. This strong lending momentum has contributed to a tightening liquidity environment. As loans continue to grow at a faster pace than deposits, reflected in the rising loan-to-money supply ratio, which climbed from 95 percent in March 2024 to 101.51 percent in March 2025, banks have increasingly turned to capital markets to maintain liquidity. In particular, Saudi banks have ramped up their sukuk issuances and other debt instruments to meet financing demand while preserving balance sheet stability. For example, several major financial institutions, including Al Rajhi Bank and Saudi National Bank, have recently raised multibillion-riyal sukuk to bolster their funding base. Saudi Arabia's expanding reliance on debt markets to fund its ambitious development agenda has been met with continued confidence from major credit rating agencies, reflecting the Kingdom's robust fiscal position and commitment to economic diversification. In 2024, the total value of listed sukuk and debt instruments in the Kingdom rose by more than 20 percent year-on-year, reaching SR663.5 billion, up from SR549.8 billion in 2023, according to data from the Capital Market Authority. This marks a significant acceleration in domestic debt issuance, underscoring the sector's growing dependence on capital markets to maintain liquidity amid sustained loan expansion. Moody's Investors Service upgraded Saudi Arabia's credit rating to 'Aa3' from 'A1' in November, citing the country's efforts to diversify beyond its oil economy. The agency noted that these diversification efforts would mitigate the Kingdom's vulnerability to oil market fluctuations and the global carbon transition over time. Similarly, S&P Global Ratings revised Saudi Arabia's outlook to positive in September, affirming its 'A/A-1' ratings. The agency highlighted the Kingdom's strong non-oil growth outlook and economic resilience, expecting an acceleration of investments to develop newer industries, such as tourism, and diversify the economy away from its primary reliance on the upstream hydrocarbon sector. These affirmations by major credit rating agencies underscore the nation's solid creditworthiness and the effectiveness of its economic reforms under Vision 2030, even as it increases borrowing to finance its transformative projects.
News.com.au
22-05-2025
- Business
- News.com.au
Key detail in latest interest rate cut as RBA keeps a close eye on the US
Interest rates have fallen once again and, while this is welcome news to many struggling homeowners, experts have issued warnings about some of the ramifications Aussies could see off the back of this decision. On Tuesday, the Reserve Bank of Australia cut the cash rate by 25 basis points, to 3.85 per cent. This is the second time the cash rate has been cut in 2025, with the move welcomed by mortgage holders, who, prior to this endured a period of prolonged, brutal rises, followed by more than a year of rates being held. But, while the focus has primarily been on mortgage holders, industry professionals say it is also having an impact on many Aussie bank accounts. Leading Australian fund manager, Betashares, has warned that people with savings in the bank should brace to see their income fall along with any future rate drops, as the banks cut interest rates on term deposits. The company noted many banks have already reduced their interest rates on term deposits by about 0.60 per cent, with further falls of about 0.50 per cent expected in this space, according to Betashares analysis. 'As a result of these cuts, future income that savers could expect to earn from Australia's $1 trillion pot of term deposits has dropped by $6 billion and could potentially continue to fall another $5 billion,' the company said. Betashares CEO, Alex Vynokur, said there were multiple options out there for Aussies looking to make returns on their savings. 'In the coming months, the returns from bank deposits are expected to fall in line with continued interest rate cuts from the Reserve Bank,' he told 'In this climate, cash and fixed income ETFs will be topical for investors seeking to make up for declining returns from cash sitting in the bank.' Why Aussies didn't see a bigger rate cut In her press conference, Governor Michele Bullock indicated the RBA was considering handing down an even bigger cut of 0.5 per cent but, ultimately, they decided against it. This was in the wake of US President Donald Trump's April 2 tariff announcement, the scale and scope and which Ms Bullock admitted left the Board and the central bank's economic team 'completely blown out of the water'. 'There was an argument and we did debate it (a 50 basis point cut) but it wasn't the strongest argument in the room,' she said. However, Betashares Chief Economist, David Bassanese, claims that, while a 0.5 per cent cut may have been on the table a few weeks ago, it was likely not given very high consideration during this most recent meeting. This is due to Mr Trump momentarily rolling back some of his harsher tariff announcements in order to allow trade deals to be negotiated. 'Fears of a US recession have eased and, with that, the sense of emergency that might have led the RBA to cut by 0.5 per cent,' he said Mr Bassanese said Tuesday's cut was not a knee-jerk reaction to outside influences like US tariffs, instead it 'reflects the simple fact that underlying inflation is falling back to the RBA's 2-3 per cent target band. The latest Q1 Consumer Price Index report showed inflation fell to 2.9 per cent in the March quarter, down from 3.2 per cent in December quarter. Inflation falling back to more neutral territory is exactly what the RBA had hoped to achieve with its 'narrow path' strategy, that saw interest rates rise sharply and slowly ease as inflation came back down. Ms Bullock said she now felt comfortable retiring the narrow path analogy 'for now'. 'I don't want to sort of suggest that I am 100 per cent confident we are there, but it is really encouraging we have got inflation down and we still have employment holding up,' she said. 'But this is not a situation that is the equilibrium. We're always going to be thrown off course by things, as we have seen.' More cuts expected as RBA eyes Trump Like the RBA, Mr Bassanese expects that the annual underlying inflation will ease further in the coming months to sit around the midpoint of the 2-3 per cent target band. If this happens, he said it should allow the RBA to cut the cash rate even more, with the economist suggesting a 'neutral level' would be around three per cent. This would allow for three further rate cuts up until early 2026, from 3.85 per cent to 3.1 per cent. 'Barring an upsurge in global or local economic growth concerns, the RBA may likely cut rates following each of the next few CPI reports,' Mr Bassanese said in his analysis. 'This is providing these confirm a further easing of inflation in line with the RBA forecasts.' And, while the chaos around Mr Trump's tariff orders is expected to continue to ease, if it doesn't, then it could lead to more significant cuts by the RBA. If the tariff drama ramps back up and the US can't reach deals with its major trading partners, there is a risk the US could fall into recession. If this does happen, Mr Bassanese said the RBA could 'easily' cut rates as far as 2 per cent or even lower. In her press conference, Ms Bullock made it clear that, while the situation in the US had eased for now, the RBA would be keeping a close eye on any new developments and is prepared to respond as needed. 'We are in a good position but there are things coming down the pipeline and we don't know what they are and how they are going to impact us,' she said.
Yahoo
19-05-2025
- Business
- Yahoo
Major banks jump the gun with interest rate cuts in warning to savers: 'Be prepared'
Australian savers are being warned their money will soon be worth less when kept in the bank. The Reserve Bank of Australia (RBA) is expected to cut interest rates on Tuesday, and major banks like NAB and Westpac are already trimming rates on their term deposits. NAB cuts its flagship 7-month term deposit by 10 basis points, taking its leading rate down to 4.10 per cent last week. Westpac, along with subsidiaries Bank of Melbourne and BankSA, also cut their 11-month special offer by 10 basis points down to 4.10 per cent for deposits opened in-branch, or 4.20 per cent for deposits opened online. Mozo personal finance expert Kylie Moss told Yahoo Finance that banks had been repositioning their term deposit offerings in May in line with expectations that the RBA will cut rates. RELATED Economist issues dire RBA interest rate hike warning: 'Back in play' Common $358 a day expense the ATO lets you claim on tax without receipts Daunting retirement 'squeeze' about to hit generation of Aussies: 'Hidden cost' 'So far, we've seen 44 banks cut term deposit rates and only 10 increasing rates. We expect to see savings rates also follow the downward slide if the RBA were to cut tomorrow,' she said. All of the Big Four banks slashed interest rates on their key savings accounts following the RBA's 25 basis point rate cut in February. Since then, some banks, including ANZ, have made further interest rate cuts to their savings accounts."The good news is that there remains a lot of competition in the savings market, so if your bank does drop rates, be prepared to switch,' Moss said. ING currently offers the market-leading savings rate at 5.40 per cent. Prior to the cash rate cut in February, the rate was 5.5 per cent, with the bank dropping it by only 10 basis points, cutting the base rate significantly and boosting the bonus rate. Savers who don't meet the monthly bonus interest criteria will see their rate drop to 0.05 per cent. Moss said it was important to pay close attention to the bonus interest criteria, with ACCC data finding 71 per cent of savers did not get the bonus rate applied because they don't meet the conditions of the deal. 'This can really help to boost your savings, but you need to make sure that you consistently hit the criteria, otherwise opt for an account with a high ongoing base interest rate,' she said. All of the Big Four banks are expecting the RBA will cut interest rates tomorrow. Commonwealth Bank, Westpac and ANZ are expecting a standard 25 basis point cut, while NAB has forecast a jumbo 50 basis point cut. Markets are pricing in a 25 basis point cut. Here's what they are forecasting: CBA - Three cuts in May, August and November to bring end of year cash rate to 3.35 per cent Westpac - Three cuts in May, August and November to bring cash rate to 3.35 per cent NAB - Five cuts in May (50 basis points), July, August, November, and February to take cash rate to 2.60 per cent ANZ - Three cuts in May, August and the first quarter of 2026 to bring cash rate to 3.35 per cent The another rate cut will have downsides for savers, it will be some much-anticipated relief for mortgage holders. A 25 basis point cut would save the average borrower $91 on their monthly repayments based on a $600,000 loan with 25 years remaining, according to Canstar. Three cuts would result in a $268 drop in repayments.
RNZ News
17-05-2025
- Business
- RNZ News
Can I get a home loan with bad credit?
Photo: RNZ Send your questions to I am in my early 70s and have no debt, some savings in the bank and a freehold house in Whanganui. I am currently renting in Karori, Wellington where I have returned with a plan to work. Where do I gain the best interest and keep what money I have safe? It is currently in two serious saver accounts with some going into a term deposit but the interest is only a bit over 4 percent. My question is - where can I maximise the rate of interest paid without being scammed? Falling interest rates are good news for people with home loans, but I know they can be tough on people like you, supplementing your income with money in the bank. I checked in with Dean Anderson, founder of Kernel Wealth, about your options. He said they would broadly range from on-call savings accounts through to managed funds. On-call bank savings accounts have lower interest rates but there are few restrictions about how you access your money. These rates could drop if the official cash rate falls further, as it is expected to. In some cases, you might be able to get a bit extra in interest from the bank if you meet certain criteria, such as not making withdrawals or meeting contribution requirements. Term deposits will usually give you a better rate - at the moment you can get more than 4 percent if you lock in for two years or more. The drawback is that your capital is locked away for that period of time. You could look at a cash fund from a bank or other fund managers. These can offer higher yields without the requirement to be locked in. "They can hold short term debt instruments, so the yield can fluctuate slightly. As it isn't a set interest rate, it can be slightly confusing for investors to get their head around," Anderson said. Beyond that, you could talk to a fund manager about putting your money into a slighlty riskier fund. Anderson said bond funds and conservative funds would be more stable than those invested in equities, but you'd still need to keep in mind that they could fall in value. "A good example of that was during Covid, when some conservative funds actually fell in value by 10 percent or 12 percent." That's a fairly extreme situation and generally conservative and bond funds should move less than riskier ones. We've seen that with the market volatility recently. If you're worried about avoiding scams, your best bet is to stick with financial services providers who are registered in New Zealand. (You can check the Financial Service Providers Register.) There should be ways you can get more interest or better returns generally within the banks and other financial institutions you already deal with, which could give you more comfort. Make sure you know who you're dealing with and don't respond to investment offers from people who cold call you or approach you out of the blue. I want to apply for a home loan but I have bad credit. Am I going to be out of luck? Not necessarily. While it's helpful to have good credit when you're applying for a home loan, bad credit doesn't always mean you've got no chance. Jeremy Andrews, a mortgage adviser with Key Mortgages, said it would make a big difference if you could explain how the bad credit happened. "I often recommend clients who think or advise they might not have good credit history, to check their own profile via - the service is free, requires a passport or drivers licence to create an account, and users can do 'soft checks' to see how their credit score is tracking at any time without impacting their credit score in the way full official credit checks can. "If there's strong equity, such as at least 20 percent for an owner occupied property, then an indicative score of 500 to 600-plus may well be worth approaching a main bank. If lower than this, then getting a good explanation of what's happened previously and why it won't happen again, plus at least three months of clean bank account conduct - no unarranged overdrafts, missed or bounced payments, and ideally savings or equity increasing too - [will help]." He said if your score is very low you could consider a non-bank lender. Some people choose to take a loan this way and then move to a main bank when their credit improves. Non-bank lending is usually more expensive and there might also be some other upfront costs, instead of the cashback incentive you might get from a bank. "We often see cases where a small bill such as for utilities was not paid amongst moving house, but once the client found out and paid it promptly, then this explanation is also looked at favourably by lenders. "Finance related bad debts are viewed very seriously and clients putting their head in the sand and hoping outstanding bills would go away, would have a harder time getting approved and need to look at higher cost options." Glen Mcleod, head of Link Advisory, said a default with another financail institution would usually mean a borrower had to go to a second-tier lender. Something smaller could be acceptable to a bank if the rest of the application was strong. "In the current lending environment, defaults or any signs of poor credit conduct can be a significant barrier. "To access creditworthiness lenders typically consider credit history and any defaults, repayment conduct on current liabilities, income stability and total debt exposure." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
