HCMC – Several banks have continued to raise interest rates for gold deposits to between 1% and 2% per annum from just 0.1% a month ago.
The highest gold rate is offered by Nam Viet Commercial Bank, at 2% per year for the 11-month term, 1.5% for the three-month term, and 1.55% for the six-month term.
The race to hike gold rates was triggered two weeks ago when Asia Commercial Bank (ACB) and Vietnam Export Import Commercial Bank (Eximbank) boosted deposit rates for gold to around 1%. ACB offered 1.1% per year for a three-month term while Eximbank quoted it at 1% for a one-month term.
ACB on Monday heated up the race by raising the annual interest rate by between 73 and 85 basis points to 1.35% for the 12-month term and 1.3% for terms of three, six, and nine months.
Late last week, Southern Commercial Bank also revised up its gold deposit rate with the highest level being 1.5% per year for terms longer than five months. Sacombank now mobilizes the yellow metal at 1% per year for a three-month period.
A banker in HCMC’s District 1 said the higher deposit rate was offered to attract more gold to meet the rising demand.
“Many people think the gold price has hit the ceiling so they want to borrow gold now to enjoy a lower lending rate (compared to Vietnam dong or the U.S. dollar),” he said.
Mobilizing more gold and dollars at this time will also help banks improve their current capital pools to meet a new rule on keeping the loan-to-deposit ratio at no more than 80% under the central bank’s Circular 13, he explained.
According to the central bank’s HCMC Branch, as of end-August, the loan-to-deposit ratio of banks in the city had been about 96.3%, as mobilized funds totaled VND683.5 trillion compared to outstanding loans of VND623.1 trillion.
Ho Huu Hanh, director of the branch, said gold deposits made up 10% of the total mobilization by credit institutions in the city.
Hanh commented on the ‘gold rush’ that many banks who had sold mobilized gold earlier to take Vietnam dong for lending now had to draw more gold to offset the loans made.
As the dollar and gold interest rate are increasing now, banks find it hard to lower the lending rate in near term as told by the central bank, said a banker in HCMC.
