CIMB Philippines rolls out time deposit offering with up to 7.5% interest

Digital-only commercial lender CIMB Bank Philippines on Wednesday announced a time deposit offering with interest rates of up to 7.5% per annum, with the bank eyeing at least a million of its clients to avail of the service in its first year.

Dubbed as the MaxSave Time Deposit, clients can choose from three term tenures — six months with a 6.5%, 12 months at 7.0%, and 24 months at 7.5% — with a minimum deposit of P10,000.

The service officially went live on Wednesday morning, with users given the option to open up to five time deposit accounts with a P1-million maximum account balance.

The product will be insured up to P500,000 per customer with the Philippine Deposit Insurance Corp. (PDIC).

“For time deposit, we are targeting to have at least 1 million time deposit customers taking up in the first year, but I think based on projection, in the next three years we expect at least 50% of our customers to take up time deposit,” CIMB Philippines chief business and strategy officer Ankur Sehgal said in a press briefing.

“Since this will be a very high interest rate of 7.5%, we do expect a very high takeup. This is also the highest time deposit (rate) in the market so because of that also, we expect very high takeup in the next coming year,” he added.

The bank ended 2023 with 7.5 million customers, which it targets to grow by 1.5 million this year, and increase even further to 10 million in the next three years. It also targets to double its balance sheet by then.

Sehgal said CIMB expects a 25% annual growth in its deposits this year, as more players have entered the Philippine market. It also targets a 40% annual growth in terms of its credit services.

Based on the MaxSave terms, depositors will be entitled to close their account any time before the end of the term, but they will be liable to pay the corresponding documentary stamp tax (DST), pre-termination fee (PTF), and other penalty fees and charges that may be “reasonably determined” and notified by CIMB.

Should they choose to close the account within two days from the creation, CIMB said it will remit the full principal amount deposited in the account without interest earnings to the linked savings account, without incurring any additional fees or taxes.

Asked how long CIMB can commit to providing the high interest rates, Sehgal said this will be under a period review and will be based on several factors such as the policy rates set by the Bangko Sentral ng Pilipinas (BSP), and the prevailing rates in the market.

“For now, of course, that’s a commitment going to the public, but we will review this on a periodic basis, as and when the BSP reduces rates or the industry market goes down or even the competition rates go down,” he said.

“We will review this on a periodic (basis), but when we launch, at least for the next few months, I think this will be our offer,” he added.

The Monetary Board of the central bank has already raised key policy rates by 450 basis points since May 2022 in a bid to tame inflation, with the benchmark target reverse repurchase (RRP) rate currently at a 16-year high of 6.5%.

Meanwhile, Maya Bank Inc., one of the six digital banks licensed by the BSP, earlier this month launched a time deposit offering with interest rates of up to 6.0%.—AOL, GMA Integrated News