Deposit rates inch down to reluctant 11%

A customer scrutinizes deposit rates offered by Vietnam Asia Commercial Bank. Deposit rates are now at the same level of 11% for terms from one to 36 months - Photo: Thuy Trieu

HCMC – Almost all commercial banks have complied with a pledge made earlier to reduce their deposit rates, but signs of reluctance are seen in the new move when lenders quote the same rate of 11% for deposits of all terms.

Since late last week, banks have cut their rates for Vietnam dong deposits to a maximum of 11% per year for terms starting from one month instead of the previous level of 11.2% under their commitments with the Vietnam Banks Association.

Some big banks such as Asia Commercial Bank, Vietnam Export Import Commercial Bank and Vietcombank have revised their deposit rates for Vietnam dong with the highest rate standing at 11% per year.

On Monday, many other banks also followed suit.

The new common rate is believed to put smaller banks at a disadvantage in competition with larger institutions. Furthermore, operating costs will also be higher as banks may attract short-term funds only when offering the same interest rate.

That means banks will have to rely on promotions to lure depositors.

At Vietnam Asia Commercial Bank, those who deposit at least VND20 million for six, nine, or 12 months can enjoy a lot of incentives such as added rate for depositors older than 50 years, bonus cash depending on the deposit value, and vouchers to buy goods.

Therefore, depositors now do not need to compare interest rates offered by different banks but will look at available promotion programs.

However, lower borrowing rates will make it possible for banks to cut lending rates as well, a move sought by the Government and the central bank.

Dam The Thai, deputy general director of HDBank, said that if all banks agree to lower deposit rates, the capital cost will fall, offering lenders a chance to cut their lending rates.

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Interest rates rise for dollar deposits

Photo: Tuoi Tre

Several commercial banks have increased the annual interest rates they pay on US dollar deposits by 0.2 percentage points to an average of 4.5-5.2 percent, sparking worries of a new interest rate war.

Both Asia Commercial Bank and Eximbank have increased interest rates on three-month term deposits to 4.35 percent and on 12-month term deposits to 4.45 percent.

Vietcombank is offering 4.5 percent for a 12-monthterm deposit in US dollars while the Vietnam-Russia Bank, PG Bank and An Binh Bank are offering rates as high as 5.2 percent.

"In the latter part of the year the dollar supply is often limited, and to attract dollars, many banks raise interest rates," said Asia Commercial Bank deputy director Nguyen Thanh Toai.

Another senior official from the same bank who asked to remain anonymous said that the bank raised interest rates to hold onto its existing depositors and did not want to get involved in a new interest-rate war.

Total foreign currency deposits at the Ho Chi Minh City branch of the State Bank of Vietnam were down 4 percent last month against July to about $8.56 billion, according to the State Bank.

It was too early to tell whether a dollar shortage would solidify into a trend toward higher interest rates, said one treasury official at Vietcombank.

"The third and first half of the fourth quarter are the toughest time," he said. "December is the best time for dollars because of abundant remittance inflows and high export turnover."

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Interest rates rise for dollar deposits

Several commercial banks have increased the annual interest rates they
pay on US dollar deposits by 0.2 percentage points to an average of
4.5-5.2 percent, sparking worries of a new interest rate war.

Both Asia Commercial Bank and Eximbank have increased interest rates on
three-month term deposits to 4.35 percent and on 12-month term deposits
to 4.45 percent.

Vietcombank is offering 4.5 percent for a
12-monthterm deposit in US dollars while the Vietnam-Russia Bank, PG
Bank and An Binh Bank are offering rates as high as 5.2 percent.

"In the latter part of the year the dollar supply is often limited, and
to attract dollars, many banks raise interest rates," said Asia
Commercial Bank deputy director Nguyen Thanh Toai.

Another
senior official from the same bank who asked to remain anonymous said
that the bank raised interest rates to hold onto its existing depositors
and did not want to get involved in a new interest-rate war.

Total foreign currency deposits at the HCM City branch of the
State Bank of Vietnam were down 4 percent last month against July to
about 8.56 billion USD, according to the State Bank.

It
was too early to tell whether a dollar shortage would solidify into a
trend toward higher interest rates, said one treasury official at
Vietcombank.

"The third and first half of the fourth
quarter are the toughest time," he said. "December is the best time for
dollars because of abundant remittance inflows and high export
turnover."/.

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