DEPOSIT interest rates are just slightly lower now than they were a year ago, and this stability is expected to continue during 1996, according to the Yearly Report by National Deposit Brokers (NDB).

The report compares the interest rate movements of the leading deposit institutions over the year to date, the one month fixed deposit accounts for sums of £25,000, and as a benchmark for the purpose of assessing the different institutions rate competitiveness, averages the rates from their various accounts and produces institutional and sectoral averages. It also ranks the top providers of Special Savings Accounts for 30 day notice accounts, one year and two year accounts.

While NDB is predicting little or no change in the short term, it concedes that the situation could change should there be higher than expected domestic credit figures, political instability in Britain or inflationary pressure in the Irish domestic market.

Any fall in rates which is not expected to be much more than 0.25 per cent and is likely to happen early in the year would depend on movements in German rates, states the report. Any increase in rates, it predicts, will happen towards the latter part of 1996 as a result of higher growth figures and inflationary pressure.

Table I shows how one month fixed deposit rates peaked at mid year in 1995 and then returned by the first week in January 1996 to levels about a quarter per cent below those established a year earlier. As the table shows the Irish Nationwide Building Society offered the highest rate over the three time frames with a rate as of last January 8th of 5.5 per cent, slightly in excess of the one month interbank market rate of 5.42 per cent.

The report analyses the competitiveness of the various financial institutions - the associated banks the commercial banks and the building societies based on a sample of their deposit rates, which provides an institutional and a sectoral average. These averages then identify "those institutions which offer depositors above and below average rates throughout their accounts."

According to the report, the interest rate averages achieved by each bank when their demand, one month, three months, 12 months, 24 months and 30 days accounts are averaged, based on a sum of £50,000 are as follows:

NDB notes that Ulster Bank continues to be the most competitive of the associated banks (it ranked first for the previous six months as well) but Bank of Ireland has moved into second place from last position, six months ago.

There are 14 commercial banks represented by the comparative analysis and four different accounts were used to draw up their averages - demand, one month, three month and 12 month accounts. The sum used is £50,000 and the results are as follows:

"At present, Equity Bank offers the highest average of all the commercial banks, with Woodchester which was number one back in July, falling back into fifth place", notes the report.

For the building societies, NDB used a £50,000 sum and averaged five different accounts demand, 30 day notice, three month, 12 month and 24 months with the following results:

According to the report, the Irish Nationwide continues to be the most competitive company in this category with the remaining societies unchanged in their ranking.

Though the deposit terms are slightly different, it is apparent from these results that the commercial banks provide the best rates for depositors with substantial sums to lodge. The sector average interest rate for the commercial banks is 5.16 per cent as opposed to 4.52 per cent for the associated banks and 4.77 per cent for the building societies.

Finally, the NDB report provides a ranking of the best Special Savings Accounts available for 30 day notice, one year and two year SSAs. As the tables (right) show, rates are varying by just a half a percentage point for 30 day and one year accounts and by just three quarters a percentage point for two year accounts. Overall, SSA rates have dropped an average of one per cent compared to six months ago.