Bank official sees little room for more interest rate hikes

Interest rates are nearing a peak and should see only a mild increase in the future, a Union Bank of Taiwan (聯邦銀行) executive said yesterday.

"Even if the central bank decides to raise interest rates again [late this month], there's not much room for interest rates to go up any further," said Herman Tu (涂洪茂), an executive vice president at Union Bank.

Tu said that the banking sector's interest rates for one-year time deposits had risen by 100 basis points to around 2.6 percent in the past year and should see only a moderate rise in the future.

To attract time depositors, Union Bank in mid-January introduced a special rate offer of 3 percent for three-year time deposits of less than NT$1.5 million (US$48,600), Tu said.

This compares with its peers' offers of 2.3 percent to 2.7 percent for three-year time deposits.

Interest payments for the special rate offer, which runs until April 17, will be made on a monthly basis. So far, the bank has absorbed more than NT$2 billion in new three-year time deposits.

Tu also expressed confidence in the bank's loans business, saying it had granted NT$110 billion in mortgages, NT$65 billion in corporate loans and NT$10 billion in car loans.

The bank, which has 79 branches nationwide, expects to add eight branches in Taipei and Taoyuan in the next two years.