Taiwanese Banks See Deposit-Lending Rate Gap Hit 2-Year High in Q4, 2010

Taipei, March 4, 2011 (CENS)--The gap between deposit and lending rates recorded by Taiwan's domestic banks hit a two-year high of 1.35 percentage points in the fourth quarter of 2010, according to the central bank here.

During the quarter the average lending rate of domestic banks stood at 2% and the average deposit rate at 0.65%, resulting in a gap of 1.35 percentage points, the highest of its kind since the first quarter of 2009.

Insiders attributed the widening gap to the central bank continually raising its key interest rates, forcing Taiwan's major loan providers to raise their lending rates. They said that keen competition in the lending market in Taiwan has made it difficult for banks to hike their lending rates or enjoy good lending profits.

The central bank is reportedly to hike its key interest rates by 0.25 of a percentage point at the end of this month to dampen the looming inflation, which may prompt domestic banks to boost their lending rates. Accordingly, the gap between deposit and lending rates is likely to further widen to 1.5 percentage points in the near future.