Commercial banks cut interest rates

Commercial banks cut interest rates

Many commercial banks have reduced interest rates on deposits which were raised to about 13 per cent three months ago.

Among major banks, only the Asia Commercial Bank and Sacombank have still maintained their rates at 13 per cent for 13-month deposits and 12.5 per cent for 12-month deposits.

Techcombank made 12 per cent their highest rate while Eximbank applied a new rate of 12 per cent for both 12-month and 13-month deposits, a reduction on their previous rate of 12.3-12.8 per cent.

Several banks are offering even lower rates, with Vietcombank dropping the amount to 10 per cent for deposits with terms of 12-months and above. Agribank have altered rates to 11 per cent for 12-month deposits and 11.5 per cent for 18-month deposits.

Small banks, which recently raised interest rates to significantly high levels in order to compete with large competitors, have also now slashed these back down.

SeABank and WesternBank lowered deposit interest rates to around 12 per cent. LienVietPostBank offered a rate of 11 per cent for 12-month and 13-month deposits, and 11.5 per cent for terms up to 24 months. The highest interest rate for long-term deposits is now 11 per cent at the Vietnam International Bank.

An anonymous financial expert told the press that commercial banks have mobilised significant capital amounts and are in no rush to attract more, and this led to the interest cuts.

The expert said the move was just temporary, adding that "banks will maintain the low rates until the end of November; a new interest rate race is widely expected to take place in December when banks launch special programmes to attract customers for Tet."

Le Xuan Nghia, a member of the National Advisory Council for Monetary Policies, said at a meeting earlier this month that in early 2013 interest rates will increase to a new level as banks begin to treat bad debts.

According to the State Bank of Viet Nam, as of October 19 the deposit growth of credit institutions reached 14 per cent, more than five times the growth of their combined lending amount. Deposits in dong increased over 17.5 per cent, while deposits in US dollars declined 1.55 per cent. In total, people's deposits alone increased by 23 per cent.

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