Banks still attractive despite low deposit rates

Banks still attractive despite low deposit rates

The latest figures from the State Bank of Vietnam’s Monetary Policy Department show that as of April 22, total bank deposits had risen 3.09 per cent against the beginning of this year, with dong deposits rising 4.26 per cent but with US dollars down 3.98 per cent.

Deposit volumes from community rose 7.48 per cent, indicating that people still favour putting their savings into banks.

According to deputy general director of NamA Bank Tran Ngoc Tam, the bank’s deposits have shot up 10 per cent in the past four months.

Similarly, Sacombank, Orient Commercial Bank (OCB) and VietA Bank also saw their deposits surpassing 10 per cent in the period.

Bank executives have said that despite the six-month or less deposit rate cap being further lowered to 6 per cent per year in mid-March, banks have still reported ample capital resources because the property and securities markets have seen little recovery, whereas gold and forex have seen far less action since being put under state control.

Currently, deposit rates at local institutions are popular with 0.8-1 per cent for demand and less than one month deposits; 5.5-6 per cent per year on deposits from one to six months; 6-7.5 per cent for deposits between six months and one year; and 7.5-8.3 per cent deposits of more than one year.

Lower deposit rates have paved the way for banks to save on costs, and from there, gradually reducing lending rates.

Priority firms for lending (production and trading, import-export, supporting industry, and SMEs) often borrow at 7-8 per cent per year and for non-priority areas, 9-70 per cent per year for short-term loans and from 11-12.5 per cent per year for medium and long-term loans.

vir