The Best Fixed Deposits of April 2020

It is extremely challenging to find good fixed deposit promotions this month as I can see banks either reducing the duration of the fixed deposit or keep on adjusting their interest rate. The 1 year interest rate for May 2020 Singapore Savings Bonds has fallen as low as 0.96%, thus any of the fixed deposits promotion below beats the Singapore Savings Bonds. Should the market crashes again, I believe banks will revise their interest rates again which happened last month.

I was extremely surprised that MayBank kept their interest rate for their fixed deposit at 1.45% per annum while I saw other banks slashing their interest rates to around 1.00% per annum.

If you have extra cash to lock in for 3 years, I will seriously request you to consider the NTUC Capital Plus single premium endowment plan which offers a guaranteed return of 2.13% p.a for 3 years. I have purchased NTUC Capital Plus using my Supplementary Retirement Scheme funds.

If you are looking for something extremely low risk right now to park your money, below are the list of Fixed Deposit promotions that I have collated for the month of April 2020:

MayBank Singapore Dollar Time Deposit

Interest Rate: 1.45%, Minimum Placement: S$20,000, Promotion Valid Until: Not stated

The total interest that you will receive if you place S$20,000 for 12 months is S$290.00. However, there are some catch should you choose to place your fixed deposit with MayBank

  • Every S$1,000 deposited into Maybank Current or Savings accounts (minimum S$2,000)
  • You can deposit S$10,000 into Maybank Singapore Dollar Time Deposit accounts (minimum S$20,000)
  • Receive 1.45% p.a. on 12-month Singapore Dollar Time Deposit

Hong Leong Finance Deposit Promotion

Interest Rate: 1.30%, Minimum Placement: S$20,000, Promotion Valid Until: Not stated

The total interest that you will receive if you place S$20,000 for 12 months with Hong Leong Finance at an interest rate of 1.30% per annum is S$260.00.

CIMB Fast Fixed Deposit Promotion

Interest rate: 1.10%, Minimum Placement: S$10,000, Promotion Valid Until: 30th April 2020

The total interest that you will receive if you place S$10,000 for 12 months with CIMB at an interest rate of 1.10% per annum is S$110.00.

Standard Chartered Bank (Singapore)

Interest Rate: 0.90%, Minimum Placement: S$25,000, Promotion Valid Until: 7th April 2020

The interest that you will get is S$150.00 based on an interest rate of 0.90% p.a. for a placement of S$25,000 for 8 months.

If you are a priority customer, the interest that you will get is S$166.67 based on an interest rate of 1.00% p.a. for a placement of S$25,000 for 8 months.

UOB Time Deposit

Interest Rate: 1.00%, Minimum Placement: S$20,000, Promotion Valid Until: 30th April 2020

The total interest that you will receive if you place S$20,000 for 10 months with UOB at an interest rate of 1.00% per annum is S$166.67.

SPH Reit 2QFY20 DPU Dipped 78.7% Due to COVID-19

No, it is not an April Fool’s Day joke. On 1st April 2020, SPH REIT announced its 2QFY20 financial results. Even though gross revenue has increased by 26.1% due to the new contribution from Westfield Marion Shopping Centre, the distribution income fell 77% and distribution per unit (“DPU”) fell 78.9%. The DPU payout for 2QFY20 is 0.30 cents in anticipation of COVID-19 challenges.

The following explains the decline in DPU.

Following the emergence of COVID-19, SPH REIT announced a Tenants’ Assistance scheme on 27 February 2020 to assist tenants impacted by the outbreak. Subsequent to 2Q 2020, S$4.6 million of rental rebates for February and March were set aside and the February tranche of the rebate will be credited to tenants commencing from April 2020. The S$4.6 million has not been recognised in the 6 months period ended 29 February 2020.

2QFY20 Financial Results

2QFY20
(S$’000)
2QFY19
(S$’000)
Change
Gross Revenue 73,268 53,123 26.1%
Net Property Income 56,532 45,855 23.3%
Distributable Income 8,272 36,440 (77.3)%
Distribution Per Unit (“DPU”) (cents) 0.30 1.41 (78.7)%

Occupancy

Occupancy remains healthy at 98.9%.

  • Paragon (99.9%)
  • The Clementi Mall (100%)
  • The Rail Mall (92.2%)
  • Figtree Grove Shopping Centre (99.2%)
  • Westfield Marion Shopping Centre (98.4%)

Lease Expiry

The lease expiry for Paragon and The Clementi Mall is less worrying but I do see a higher lease expiry percentage for The Rail Mall, Figtree Grove and Westfield Marion Shopping Centre in FY20 which can impact the gross rental income.

The challenges for lease renewal can be the measures that are currently imposed due to COVID-19 such as the closure of restaurants, gyms, cafes and cinemas. Shopper traffic is also significantly reduced due to travel bans and restrictions to stay at home.

Dividend Yield

Besides this quarter, I am expecting future dividends over the next few quarters or even next financial year to be cut as well (depending on how long the COVID-19 situation will drag).1.38 cents was already paid out in 1QFY20. So if we based on the modest distribution of 0.30 cents in the next two quarters, I estimate the total distribution to be 2.28 cents.

Thus, based on the current share price of S$0.71 and a total DPU of 2.28 cents for FY20, the estimated dividend yield is 3.21%. Will the share price dipped further? I am not sure as no one has a crystal ball.

Is it a good time to enter into SPH REIT now? The REIT is at its historical high yield (7.89%) and my thought is that we should buy in small tranches should you want to buy into SPH Reit right now. If the share price fall lower, then deploy a second tranche.

The dividend yield will recover when the market recovers.

May 2020 Singapore Savings Bonds GX20050A is 1.39%

The effective interest rate for May 2020 Singapore Savings Bonds (GX20050A) is 1.39% if you held it for 10 years. Due to the COVID-19 situation, this is the lowest interest rate that was offered by Singapore Savings Bonds since inception. The minimum amount you can purchase for Singapore Savings Bonds is S$500. If you decide to hold and sell it for 1 year, the effective interest rate is 0.96% which is worst than what fixed deposits can offer. But of course most fixed deposit requires a minimum sum of at least 10K. If you are unable to fork out 10K at the moment, Singapore Savings Bonds is still a good place to dump your money to earn interests.

Last month, NTUC Income has released their single premium savings plan (“NTUC Capital Plus“) with a guaranteed return of 2.13% per annum over 3 years. There is a minimum sum requirement of 5K. I have purchased it using my Supplementary Retirement Scheme fund.

On 1st January 2020, DBS Bank has notified that the dividends from CDP will no longer qualify under the investment category for DBS Multiplier Account. This means that the reason for purchasing Singapore Savings Bonds for the purpose of additional interest for DBS Multiplier Account is no longer valid.

Tracking Singapore Savings Bonds via Stocks Café

My favorite website, Stocks Café has introduced a new feature to allow adding of Singapore Savings Bonds into your portfolio. If you didn’t know, I signed up as a Friend of Stocks Café as my most favorite feature of Stocks Café is the automated tracking of dividends payout.

This is the third year that I continue to use Stocks Café to track my dividends.

Tracking Singapore Savings Bonds via My Savings Bonds Portal

MAS has launched My Savings Bonds Portal where you can track your Singapore Savings Bonds purchases separately from your stock purchases. I have done up a simple guide here. (Read more: Guide to My Savings Bonds Portal)