Deposit interest rates under pressure to increase
Deposit interest rates under pressure to increase
Pressure from ensuring liquidity, meeting rising credit demands and purchasing Government bonds has caused commercial banks to hike their savings interest rates to attract depositors.
Instead of introducing promotional programmes, as in the past, banks have used their high deposit rates to lure customers. Currently, the central bank sets a cap of 5.5 per cent on short-term deposits of less than 6 months. Meanwhile, higher rates are floated.
Viet Capital Commercial Joint Stock Bank (Viet Capital Bank), for example, has launched a programme in which online deposit interest rates have been increased by 0.3 per cent per year since April.
Also, Viet AU Commercial Joint Stock Bank (VietA Bank) offers an additional 0.2 per cent interest rate per year for depositors aged 45 years and older.
Other banks also add 0.2 to 0.3 per cent interest rate per year to customers depositing large amounts of money.
The Export Import Commercial Joint Stock Bank (Eximbank), Sacombank and Orient Commercial Joint Stock Bank (OCB) are offering the highest deposit rates of 7.5 per cent, 7.55 per cent and 7.7 per cent per year, respectively, for 13 month deposits of at least VND500 billion (US$22.2 million).
A report from the National Financial Supervisory Committee also showed that liquidity at banks last month was under pressure, pushing inter-bank rates up 1 per cent for all terms.
Experts attributed the interest hike in deposits to rising credit demands and the draft revised Circular 36/2014/TT-NHNN, which lowers the ratio of using short-term funds for medium and long-term rates from 60 to 40 per cent. Currently, the ratio at State-owned banks is 33.91 per cent, while the rate is higher at 35.58 per cent at commercial joint stock banks. Therefore, these banks have the need to attract long-term mobilisation to ensure they reach their prescribed limits.
Additionally, banking expert Nguyen Tri Hieu said that banks are being forced to hike deposit interest rates to ensure liquidity, besides meeting rising credit demands.
Further, according to experts, banks also need capital to purchase Government bonds. This year, the finance ministry plans to issue G-bonds worth VND220 trillion, of which nearly VND111.79 trillion in G-bonds were issued by May 6. In Viet Nam, banks are allocated more than 80 per cent of total G-bond purchases.
Banks also need capital to boost consumer lending, as these loans have higher interest rates than corporate loans.
As for VP Bank, for example, after reporting a profit of nearly VND1 trillion from consumer loans last year, the bank targeted its consumer loans to rise by more than 30 per cent this year.
