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Long-term interest rates hit 19% to lure depositors
Commercial banks this week continued raising long-term deposit interest rates, up to 19 per cent per year, in an attempt to attract new deposits.
Most short-term deposits offered rates of around 18 per cent annually.
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.
Since then, local lenders have raised interest rates even further, pushing rates past 15.5 per cent, then 17 per cent and now past 18 per cent on average.
My Xuyen Commercial Bank hiked interest rates to 18.84 per cent annually for three month terms and to 19.56 per cent for 12 month deposits.
12 month deposits yielded 19 per cent annually at Kien Long Bank
VP Bank offered 18.8 per cent rates to six month deposits and Sai Gon Commercial Bank (SCB) gave the same rate to one year terms.
SCB even offered 19.4 per cent interest to 50-year-old depositors for 370 day terms.
Techcombank hiked deposit rate to 18.7 per cent for six to 36 month deposits of at least VND3 billion (US$180,722).
For over VND10 billion deposits, ACB offered 18.9 per cent per year for 13 month terms. SeABank offered 18.12 per cent rate for three to six month deposits of VND2 billion ($120,481).
For most high interest-collecting deposits of a certain amount, banks do not allow depositors to withdraw before maturity, or else depositors would be stuck with the lower interest rates of a no-term deposit.
In fact, some so-called high liquidity banks like ACB, Sacombank, Techcombank and VP Bank continued to increase their capital mobilisation with various kinds of promotion programs meant to lure even more long-term depositors.
Some lenders still defended the increased rates, claiming that they were meant to keep existing clients depositing with them rather than to generate liquidity.
Techcombank, for example, which reported that they mobilised VND42 trillion ($2.53 billion) in May alone, up 21 per cent against the beginning of this year, was still sweetening deposit rates.
However, what should be noted here is the effectiveness of capital mobilisation and lending at small banks.
A managing director of one HCM City-based bank, who wished to remain anonymous due to the sensitive nature of the issue, said that: "Even the very high deposit rates at small banks could help them attract new depositors, but this also poses challenges to their balance sheets."
Responding to this comment, some lenders in Ha Noi confessed to Viet Nam News that most of the highest interest rates were for long term deposits which consumers seemed not to want to join.
This suggests that advertising high rates for terms far longer than most investors would find attractive was largely a means of manipulating potential depositors.
VNS
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