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Banks sweeten rates to attract depositors
Commercial banks this week continued raising long-term deposit interest rates, to around 18.5 per cent per year, in an attempt to attract new deposits, however, depositors are not likely to join in long-term saving during the current period of interest rate changes.
Most short-term deposits are offered interest of around 17.5 per cent annually.
It should be reminded that the State Bank of Viet Nam on June 11 considerably raised the benchmark interest rate, bringing the prime rate up 2 percentage points, from 12 to 14 per cent per year. It was the second time prime rates were moved up in four weeks.
In a promotion titled ‘super lucky saving’ by Techcombank, the bank offered a deposit rate of up to 18.70 per cent per year for over VND3 billion (US$181,818).
The bank, with a ‘flexible savings’ programme, offered 18.50 per cent for over 12 month terms. Six and nine month deposits were given in turns 18.2 and 18.40 per cent per year.
Saigon Bank at the same time also offered 18.4 per cent per year for nine-month deposits.
Deposits with terms over one year at SCB had 18.4 per cent, for a 370-day deposit.
Some other local lenders also hiked rates to 18.5 per cent for one-year deposits together with many promotion programmes, giving depositors opportunities to win prizes such as BMW, Mercedes-Benz and Piagio motorbikes and laptops.
However, depositors joining "savings with prizes" were not allowed to withdraw their money before the deposit’s terms matured, or else be they would be stuck with the lower interest rates of non-term deposit.
"I divided VND200 million ($12,121)in savings to join savings programmes at four different banks," said Nguyen Thi Ha, a customers at Techombank. "I will miss the opportunities if I put all my money in one bank."
Another customer who was on the way to depositing VND4billion in Sacombank for one week said: "I think the interest rates are not sustainable enough to keep my money for the long-term. I chose very short terms because if any changes occur, I can withdraw the money and enjoy higher rates elsewhere."
The same situation has also occurred with US dollar deposits. Several banks have moved up US dollar deposit rates to 8 per cent per year, but have limited them to more than one-year terms.
A managing director of one HCM City-based bank, who wished to remain anonymous due to the sensitive nature of the issue, said sweetening interest rates was one of the measures to attract more depositors.
"You see, when you look at posters outside banks, they only show the highest rates and naturally, you think that you should go there. That’s our target."
The chairman of a leading commercial bank told Viet Nam News that: "Actually, most lenders are interested in very short or short-term deposits because it’s safer at this time. So, just think, if we offered such high rates of 18.5 for short-term deposits, how would we survive with the cap of 21 per cent lending rates without charging additional fees?"
"Personally, I think the common ground of deposit rates right now is about 17.5 per cent and that will remain stable for at least the next few weeks," he said.
In fact, with deposit rates of 18.5 per cent, together with other costs to attract capital, lenders have to pay up to 20.5 per cent ultimately. The profit margins at this point seem quite narrow.
VNS
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