【Hong Kong Dollar Fixed Deposit】Hong Kong Dollar 1-year fixed deposit with a maximum interest rate of 2.8% earns 14,000; additionally, 18 banks and small to medium-sized banks are closely following HSBC in reducing interest rates

▲ Hong Kong Dollar Fixed Deposit Rate Cut Intensifies

Click the chart 👇👇👇👇 to view Hong Kong dollar fixed deposit interest rate comparison

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The conflict between the US and Iran may extend into September. As Middle Eastern funds seek safe havens, Hong Kong dollars are viewed as a “stable coin,” causing a decline across all interest rates. No wonder, this week saw as many as 19 banks competing to lower Hong Kong dollar fixed deposit rates (much more than 12 last week), the most this year, including seven banks on Friday (March 6) reducing rates again (Fubon, CCBI, Standard Chartered, Mox, Ant, StarStar, and PAO). Conversely, some banks unexpectedly increased rates after reductions (two banks last week).

The rate cut wave is expected to last at least half a month, with a wait until the end of the month. As the first quarter ends, rate hikes may bring a turnaround, driven by three main reasons:

(1) Middle Eastern funds seeking refuge: Iran crisis prompts hot money to find safe havens

(2) Gulf War unlikely to resolve quickly: Foreign reports suggest US military actions against Iran could last at least 100 days, possibly extending to September, rather than the 4-5 weeks Trump mentioned. Market expects a prolonged US-Iran conflict, which may delay major development projects and limit high-yield deposit options.

(3) Major banks leading rate cuts: HSBC was the first in March to cut fixed deposit rates, followed by small and medium banks, sparking a rate-cut frenzy.

In summary, 25 Hong Kong banks adjusted fixed deposit rates this week, with 19 banks lowering (including Standard Chartered, ICBC, Fubon, Bank of Communications, and PAObank, which cut rates twice in a week; HSBC, Hang Seng, SC, ICBC, E.SUN, Nanyang Commercial, Shanghai Commercial, CCB, OCBC, Public Finance, Ant, HSBC, Lee Hysan, Mox), and 6 banks both increasing and decreasing rates (e.g., CCB short-term rate cut, long-term rate increase; Fusion, StarStar, and Chuangxing increased then decreased; while Public Bank and Dah Sing decreased then increased).

*Note: Only the highest rate after adjustment is listed for each bank. Rates are based on Hong Kong banking authority announcements.

Small and medium banks surprise with aggressive rate cuts, offering 2.8% interest

With the US-Iran prolonged conflict, Hong Kong banks have paused rate hikes! March started with continued rate reductions, but this week still saw two record-high rates: 18-month and 24-month deposits. The top interest rate reshuffle involved five deposit terms: 2 months, 4 months, 1 year, 18 months, and 2 years.

The biggest surprise this week was Dah Sing, which offered 2.8% for 1-year, 18-month, and 24-month deposits, requiring only new customers with a minimum of HKD 100,000. For a maximum of HKD 500,000, the interest earned could be up to HKD 14,000. Two new features:

(1) Flexible withdrawal: interest paid monthly (about HKD 1,166 per month on HKD 500,000), or partial principal and interest each month

(2) Increased liquidity.

This is the second bank after Mox to promote flexible interest payments on fixed deposits, rather than waiting until maturity for principal and interest repayment. However, note that continuous withdrawals reduce principal, which in turn shrinks interest accumulation, making it a “spicy but not spicy” option.

Review of the big banks’ rate wars:

• 7-day highest rate: Fubon 21.3% (new customer exclusive)
• 14-day: Fubon 25% (new customer)
• 1-month: PAObank 15% (recommended new customer)
• 2-month: Nanyang Commercial 2.25% (Fubon reduced to 2.15% on Friday)
• 3-month: CCB Asia 6.88% (limited to top 20% deposits), alternative 5.88%
• 4-month: Public Finance 2.5% (just ahead of Fubon at 2.45%)
• 5-month: Nanyang Commercial 2.4% (reduced by 0.25% on Wednesday)
• Half-year: PAObank 2.9% (extended to end of March)
• 7-month: Public Finance 2.125%
• 9-month: StarStar 2.5% (added 0.1% Thursday)
• 1-year: Dah Sing 2.8% (PAObank reduced to 2.7% on Friday)
• 18 months: Dah Sing 2.8% (leaving HSBC 2.25% behind)
• 2 years: Dah Sing 2.8% (replacing HSBC as top)
• 36 months: Mox 2.3%
• 48 months: Mox 2.3%

Banks compete fiercely for depositors amid “interest erosion”

The 3-month interbank rate, reflecting bank funding costs, is currently 2.46%, with a half-year rate of 2.63%. However, the highest fixed deposit rate for half-year is 2.9%, and for 3 months, it reaches 6.88%, with both due to mature at the end of this month, highlighting small and medium banks’ strategic “interest war” before quarter-end, mainly to attract new customers at a cost. The top 1-year fixed deposit rate is 2.8%, matching the 2.8% interbank rate.

IPO frozen capital of hundreds of billions is quickly returning, including: China Circular Packaging Service provider Youlesai sharing, brokerages lending out at least HKD 117.5 billion margin, Zhaowei Mechanical and Electrical about HKD 233.8 billion margin, along with mainland industrial robot manufacturer Estun, and mainland wireless communication modules and solutions provider Megachip, all locking in funds through IPO.

Citi’s Liao Jiahao predicts the US dollar will rebound above 101 in the second half

Interbank rates have fallen across the board, with overnight rates dropping for two consecutive days to 1.86%; the 1-month interbank rate also fell to 2.19%, hitting last August’s low. The banking system’s total balance remains HKD 53.8 billion, with the HK dollar temporarily quoted between 7.8185 and 7.8222.

High oil prices may reignite inflation, and the market expects the Monetary Authority to refrain from rate cuts in March. The US-Iran conflict could prolong, and the US dollar index is approaching 99, currently at 98.956.

Citi’s chief strategist Liao Jiahao forecasts the 3-month rate at 99.67, half-year to 1 year at 101.88; long-term target at 99.27.

Hang Seng closely follows HSBC’s rate cuts; Standard Chartered withdraws 2% for half-year

Additionally, among the four major banks, HSBC, Hang Seng, and Standard Chartered are rare in starting March with rate cuts; Bank of China Hong Kong has temporarily held back.

• Comparison of the four major banks’ official rates:
• #7 days:
  HSBC 7% (for qualified new funds, branch or phone wealth management), 6% (liquidity promotion)
  Standard Chartered 5% (cut by 2% on Feb 10)
  Bank of China HK, Hang Seng 5%
• #1 month:
  HSBC 10% (stock reward plan), 3% (for new funds)
  Hang Seng 3% (launched Jan 2, HKD 1 million threshold), 2.5% (HKD 10,000 threshold)
  BOC HK 2%
• #3 months:
  HSBC, Hang Seng 2.2% (both cut by 0.2% on March 2)
  Standard Chartered 2.1% (cut by 0.1% on March 2)
  BOC HK 2.1% (cut by 0.3% on Feb 4)
• #6 months:
  HSBC 2% (cut by 0.1% on March 2)
  Standard Chartered 1.95% (cut by 0.05% on March 2)
  Hang Seng 1.9% (cut by 0.2% on Feb 9)
  BOC HK 1.9% (cut by 0.2% on Feb 4)
• #1 year:
  Standard Chartered 2% (cut by 0.2% on Feb 10)

PAObank offers 15% for 1-month “extra time”

Meanwhile, six digital banks (formerly virtual banks) have taken action this week: Ant Bank, livi bank, Mox, and PAObank have alternately reduced rates; StarStar Bank and Fusion Bank have mixed increases and decreases.

• Comparison of digital banks’ short and long-term rates:
• 7 days: Fusion 21.3% (new customer exclusive)
• 14 days: Fusion 25% (new customer)
• 1 month: PAObank 15% (extended to end of March)
• 2 months: StarStar 1.5% (down 0.15% this week)
• 3 months: PAObank 3% (extended to end of March)
• 4 months: StarStar 2.2% (down 0.05% Friday)
• Half-year: PAObank 2.9% (extended to end of March)
• 9 months: StarStar 2.5% (up 0.1% Thursday)
• 1 year: PAObank 2.7%, StarStar 2.6%, HSBC 2.55%, Ant 2.5%, Fusion (low threshold) 2.4%, Mox 2.3%, ZhongAn 2.01%, livi 2%
• 18 and 24 months: HSBC 2.25%
• 36 and 48 months: Mox 2.3%