Yield appetite huge among SA investors

South African retail investors and savers are clamouring for the highest possible yield at the lowest possible risk. At the same time, they want greater flexibility, even in long-established product categories they know and trust such as fixed deposits.

The market insights come from Bidvest Bank following its April and May campaign to build awareness of the highly competitive interest rates now available across the bank’s range of fixed deposit accounts.

The 12-month Bidvest Bank interest rate on a fixed deposit for a minimum R10 000 investment is 7.5%, payable at the end of the term. If monthly interest payment is preferred, the rate is 7.25%.

The end-of-term rate for pensioners is even higher at 7.76%.

Response to the marketing initiative around the fixed deposit product set has exceeded all expectations, said Brett Jury, head of transactional banking at Bidvest Bank.

She noted: “South Africa has gone through several years of record interest rate lows, which explains the positive reaction to such competitive rates. There is huge investor appetite for high yield combined with low risk.

“Pensioners – who traditionally include a high proportion of income investors – are particularly keen to achieve optimum rates. They are at an age where it’s usually best to avoid unwarranted market risk, which explains their positive response to an attractive fixed deposit offer as this category of product is extremely low risk.”

Though competitive rates are key, market intelligence indicated to Bidvest Bank that additional features were increasingly demanded by a new generation of income investors that dislike rigid or restrictive product design.

Brett added: “We found that a jaundiced view was taken of minimum investment levels as high as R50 000. Traditionally, capital sums like this have been necessary to unlock the most attractive rates.

“A key demand is for lower minimum investments that make attractive fixed deposit yields accessible to the man-in-the-street.”

Another demand is for flexibility.

Bidvest Bank therefore offered a choice across its fixed deposit range. Investors could access an improved rate by waiting until the end of the term for their interest payment or they could take the payment monthly.

“Today’s banking customer is irritated by any suggestion his or her bank has a take-it-or-leave-it attitude. They expect a choice. That’s why we built the monthly or end-of-term payment option into our product design.

“All targets set for our marketing campaign have been exceeded, indicating that our reading of marketplace dynamics was correct. The challenge now is to keep on innovating and keep on meeting expectations.”