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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Vietnam’s banks asked to lower deposit rates to 11 pct

The Vietnam Banks Association has asked members to reduce deposit rates to no more than 11 percent by Oct. 15 from 11.2 percent, according to a statement on the central bank’s website.

For non-term deposits and deposits of less than three months, the association asked commercial banks to make a bigger reduction to create a “suitable” interest-rate curve to attract long-term funds, according to the statement. Members were also asked to lower dollar-deposit rates and to cut borrowing costs to spur lending, according to the statement.

The Southeast Asian nation’s government has been asking commercial banks to increase lending to support the economy and meet a target for 25 percent credit growth this year. The State Bank of Vietnam on Sept. 28 allowed lenders to use 25 percent of non-term deposits made by businesses for loans. Bank credit has grown 19.27 percent from the start of the year to Sept. 27.

Vietnam’s gross domestic product may expand 6.7 percent this year, surpassing a target of 6.5 percent, Nguyen Xuan Phuc, chairman of the Government Office said Sept. 30. The government in May asked the State Bank of Vietnam to lower deposit rates to 10 percent and cut borrowing costs to 12 percent to spur economic growth.

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Vietnam’s banks asked to lower deposit rates to 11 pct

The Vietnam Banks Association has asked members to reduce deposit rates to no more than 11 percent by Oct. 15 from 11.2 percent, according to a statement on the central bank’s website.

For non-term deposits and deposits of less than three months, the association asked commercial banks to make a bigger reduction to create a “suitable” interest-rate curve to attract long-term funds, according to the statement. Members were also asked to lower dollar-deposit rates and to cut borrowing costs to spur lending, according to the statement.

The Southeast Asian nation’s government has been asking commercial banks to increase lending to support the economy and meet a target for 25 percent credit growth this year. The State Bank of Vietnam on Sept. 28 allowed lenders to use 25 percent of non-term deposits made by businesses for loans. Bank credit has grown 19.27 percent from the start of the year to Sept. 27.

Vietnam’s gross domestic product may expand 6.7 percent this year, surpassing a target of 6.5 percent, Nguyen Xuan Phuc, chairman of the Government Office said Sept. 30. The government in May asked the State Bank of Vietnam to lower deposit rates to 10 percent and cut borrowing costs to 12 percent to spur economic growth.

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OCB rushes to raise funds

Trinh Van Tuan (C), general director of OCB, introduces his bank’s new product and promotion program at a news briefing in HCMC on Wednesday - Photo: Thu Thuy

HCMC – With a new rule on higher safety ratios coming into force in early October, Orient Commercial Bank (OCB) on Thursday launched a new deposit product and a VND7.5-billion promotion program to accelerate fund raising.

The bank’s promotion program from September 1 to November 27 will award VND7.5 billion in prizes for depositors in lucky draws. Those who deposit a minimum of VND5 million or US$300 are eligible to join the draws.

The special prize is an apartment worth VND1.1 billion in Thinh Vuong Residential Place project in District 2 in HCMC.

The bank’s new product links payment and call deposit accounts for customers, so they just need to register a maximum amount for payment when opening the account. The surplus in this account will be automatically transferred to a demand deposit account with a higher interest rate, at 5.8% per year.

Trinh Van Tuan, new general director of the bank, told a news briefing in HCMC on Wednesday that those products were designed to retain existing customers and attract new deposits to meet the safety ratio requirement provided in the central bank’s Circular 13.

The circular requires banks to ensure the ratio of outstanding loans to raised funds is 80%. But the current ratio of OCB is 90%.

In the first eight months of the year, OCB obtained VND250 billion in pre-tax profit, 62.5% of the year’s target.

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