Deposit, lending rates inch ever closer
Deposit, lending rates inch ever closer
The domestic financial market is witnessing a rare phenomenon that is lending and deposit interest rates have get so close to each other.
Within three recent months, many banks have silently or noisily participated in a race in raising deposit interest rates to mobilise more money from the public.
Agribank typifies the trend. The interest rate of its deposits with the three-month term has increased by 0.5 per cent to 7 per cent per year, while the interest rate of over 12-month deposits has climbed to 8 per cent per year.
Vietinbank has increased the interest rate of dong deposits with less three-month terms from 6 per cent to 6.5 per cent per year, and those with terms from 3 and 7 months to 7 per cent per year.
A similar situation is also seen at Vietcombank at which the interest rate of deposits with terms from 6 to 12 months has been raised to between 7 and 7.5 per cent per year. The rates of 6.5 or 6.8 per cent have been applied to deposits with terms from two to three months.
The deposit interest rate race at commercial banks seems more tense. After Techcombank has raised the interest rate of less 12 month deposits to 6.75 and 7.45 per cent per year.
While the banks are vying with each other to raise their deposit interest rates they have also made efforts to cut their lending interest rates, sometimes making them even lower than their deposit rates.
ABBank, for instance, has recently launched a VND1.5 trillion (US$70 million) preferential credit package with the interest rate of only 7.9 per cent per year for enterprises. The lending rate is only 0.4 per cent higher than the deposit rates of Oceanbank, Vietcombank and Techcombank.
On the occasion of its 20th anniversary, SHB has offered the lending interest rate of only 8 per cent for enterprises.
Meanwhile, OceanBank is lending household-based businesses at the interest rate of just 8.5 per cent per year, 1 or 1.5 percentage point higher than the popular deposit rates.
Some commercial banks are even ready to get loss when they offer consumer loans at the interest rate of just between 5.99 and 6 per cent per year to enterprises and individuals to help them buy autos and housing.
According to a CEO of a commercial bank in HCM City who declined to be named, the disparity between the lending and deposit rates now is under 3 per cent, much lower than the 5 per cent level in the previous time.
A source from the State Bank also says that the ceiling interest rate of 7 per cent is being applied for under 6-month deposits, down by 2 or 3 percentage points as compared with the rate recorded in early the year.
Meanwhile, the lending interest rate of 9 per cent is applied to the five prioritised sectors, down by 3 or 5 percentage points.
As a result, the interest rate spread between loans and deposits is only 2 per cent per year.
With such a small disparity, the banks' profit is predicted to significantly reduce while the banks will have to use a majority of it for the risk prevention fund (provision for bad debts), paying deposit insurance premiums, and other operating costs.
This also means that the banks would find it difficult to realise their profit targets set for the year.
vietnamnews
