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Deposit interest rates going down on good news
As previously predicted, commercial banks, encouraged by the goods news about the slow CPI increase of 1.56% in August and the petrol price decrease by VND1,000/litre, have been slashing interest rates further.
Commercial banks, encouraged by the goods news about the slow CPI increase of 1.56% in August and the petrol price decrease by VND1,000/litre, have been slashing interest rates further.
Observers say the interest rates of long-term deposits have been slashed to 17.5% on average from the previous level of 18%.
In the first two weeks of August 2008, SeABank two times slashed VND and US$ interest rates. The highest interest rate offered by the bank is now 18.36% for 3-month term deposits.
All commercial banks, both state-owned and joint-stock banks, have made interest rate cuts in recent days after they heard the good news about the low CPI increase in August, macroeconomic stability and the improvement of the monetary market.
Some banks have stopped mobilising very short-term capital (1-2-3 week term deposits), or are offering relatively low interest rates on these deposits at 13-15.5% per annum. Meanwhile, the highest rate for US$ deposits has been lowered to over 6% per annum.
On August 23, East Asia Bank cut interest rates again for long-term deposits. The bank’s rates for 3-12-month term deposits are now at 18-18.1% per annum, much lower than the highest peak the bank once applied at 18.5% per annum. Meanwhile, the rates for 13-36-month term deposits are hovering around 17.5-17.6% per annum.
Tran Phuong Binh, General Director of EAB Bank, said that if CPI is restrained at low levels in the next months, and the monetary market stabilises, banks all will consider lowering deposit interest rates in order to save up the capital mobilisation cost.
Prior to that, on August 18, Sacombank announced new interest rates for VND, US$ deposits and gold deposits. The highest interest rate the bank is applying is approximately 18% per annum for VND deposits, while the rate for US$ deposits is 5.5% (13-month term) and 3.6% for gold deposits.
Bankers said that the deposit interest rates will not see big changes in the last months of the year, with the highest peak at 18% per annum.
Vo Van Chau, General Director of OCBank, said that banks, especially small ones, had to mobilise capital at high costs in the first seven months of the year, therefore, they will think of slashing interest rates in the upcoming months to offset the high costs.
Chau said that the so-called ‘running money’ is not occurring at this moment (money going from one bank to another as depositors withdraw money from one bank to deposit in another that offers higher interest rates).
He said that depositors have realised that they will not get profit by taking back money from banks before the maturity date.
According to the HCM City Statistics Office, the outstanding loans decreased by 2.5% in August over the previous month, while the mobilised capital increased by 2.7% over July. HCM City Banks had mobilised VND542,000bil by early August, up by 11.3% over the beginning of the year.
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