Mainland lenders have taken more aggressive strategies to boost their local retail market share
The recent hike in time deposit rates by several local and mainland banks will not be sustainable in the long run, bankers say.

Linda Wong, DBS Bank (Hong Kong) managing director and head of consumer banking, said mainland lenders have taken more aggressive strategies to boost their local retail market share and pushed deposit rates higher.

"In the past, they weren't active in the retail market," Wong said. "Now they are. I think it may be for the sake of market share."

She said it was almost unheard of for deposit rates to be higher than mortgage rates. "I'm concerned if deposit rates are similar or higher than mortgage rates. How can you sustain the business?"

While Wong believes clients will not easily switch banks because of "insignificant differences" in rates, DBS may raise its rates if one or two more big banks also do so.

Standard Chartered Bank and Citibank earlier introduced rates as high as 1.1 percent for 12-month and seven- month deposits, respectively.

Stephen Man Wai-shing, Standard Chartered Bank (Hong Kong) head of secured lending, believes some lenders have adopted promotional rates to lure clients before revealing interim results.

He believes it is hard to sustain a situation where deposit rates are higher than the current minimum mortgage rate of HIBOR plus 0.7 percent.

Wong said competition in the saving and mortgage markets is fierce, but DBS results topped market average.

Its consumer loans were up 20 percent last year, versus a d
rop of 2.6 percent in the market. Its card outstanding balance grew 9.6 percent while the market shrank by more than 1 percent.

DBS plans to hire 50 more consultants and 200 frontline staff this year. It will keep branch numbers at 54, but will relocate some outlets.

The bank opened its first personal finance center early last year. Two more were officially launched yesterday.