SBM Bank Kenya has opened a special deposit window targeting Sh3.5 billion in fresh funds, offering investors annual returns of up to 11.25 percent and 6.5 percent for deposits of at least Sh10 million or $100,000 (Sh12.9 million), respectively, to be locked in for two years or more.
The deposit mobilisation will be through a high-yield fixed deposit product offered in both Kenyan shillings and US dollars, open for roughly two weeks or until the bank meets its fundraising target.
The lender will use the amount to strengthen its balance sheet.
The lender said it will offer an 11 percent return for new or existing customers willing to bring in at least Sh10 million in fresh deposits and lock it for two years. Those willing to lock it for three years will earn 11.25 percent annually.
Dollar-denominated deposits will earn six percent and 6.50 percent per year if held under the two-year or three-year options, respectively. The interest payments will be made every six months.
SBM said it targets up to Sh1.5 billion under deposits invested for two years, and Sh2 billion for those to be held for three years.
“Investors with substantial scale seek certainty over speculation. Our high-yield fixed deposit provides exceptional returns, guaranteed preservation of capital, and semi-annual income streams that can be integrated into financial planning,” said Bhartesh Shah, SBM Bank Kenya CEO.
“Additionally, as deposits can serve as collateral, clients retain access to liquidity without compromising yield.”
Qualifying customers will get double-digit returns on their local currency deposits at a time when the industry’s interest rate on deposits has been falling.
Latest Central Bank of Kenya data shows average returns on deposits fell to 7.5 percent in October, having been on a decline from the recent peak of 11.48 percent in June last year.
This means the double-digit returns offered by SBM are likely to appeal to savers, especially given that rates on government paper have also been trending downwards.
