Fig 1: DBS 1QFY16 results
Fig 2: OCBC 1QFY16 results
Fig 3: UOB 1QFY16 results
Comparing the 3 figures, DBS is paying its customers an average deposit rate of 0.56%, while OCBC is paying a weighted average of 1.14% and UOB 1.15%. DBS is paying only half the rate of OCBC and UOB and has the most deposits among the local banks! What's more, DBS net interest margin is the highest among them. There must be a lot of "stupid money" lying around for this to happen.
For individual savers like us, getting 1+% for our money is easy. Just credit your salary through OCBC 360 account to enjoy a rate of 1.25% or a CIMB Fast saver account for 1%. So why are people settling for 0.56% or less with DBS?
How much is DBS saving?
If DBS were to pay its customers OCBC's rate of 1.14%; based on DBS's current deposit amount of $313 billion, DBS will have to pay out an additional s$1.81 billion annually. That is 39% of its net profit.
To those who park a significant amount of money in a DBS/POSB account, thank you for your contribution towards nation building by contributing to our nation's coffers through the DBS dividends received by Temasek.
However as a financial blogger, I question if that is a smart money management decision.