Savers in the country continued to earn a miniscule amount from keeping their money in banks, with the average annual interest rate on savings accounts averaging only 1.04 percent in March.
MANILA, Philippines—Savers in the country continued to earn a miniscule amount from keeping their money in banks, with the average annual interest rate on savings accounts averaging only 1.04 percent in March.
This marked a decline from the already modest 1.44 percent recorded in the same month last year, data from the Bangko Sentral ng Pilipinas showed.
Nonetheless, the latest figure represented an increase from the all-time low of 0.97 percent recorded in February this year.
Furthermore, interest earnings from bank deposits are charged a 20-percent creditable withholding tax, which even reduces the net yield even more.
The low-interest rate environment in the country is being influenced by the existing monetary policy of the Bangko Sentral ng Pilipinas, which said this policy has its advantages.
BSP said low interest rates, which mean bank loans are cheaper, help encourage people and businesses to borrow to fund consumption and investment activities.
Last year, the BSP cut its key policy rates—which influence commercial interest rates—four times by a total of 100 basis points.
A cut in the central bank’s key policy rates affects not only the interest rates on savings accounts, but also the interest rates that banks charge on loans.
The BSP said bank lending in the country has been growing robustly, thanks to higher demand for borrowings brought about partly by low interest rates.
It reported earlier that outstanding loans from universal and commercial banks in the country reached P3.22 trillion as of the end of March, up by 14.2 percent from P2.82 trillion as of the same period last year.