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Deposit interest rates unattractive
Depositing money at banks is not the first choice of people who have idle capital now as deposit interest rates have continued to drop.
After the State Bank of Vietnam continuously slashed the basic interest rate several times just within a short period in a move to loosen the monetary policies, commercial banks have rushed to cut their deposit and lending interest rates. Currently, the highest deposit interest rate offered by state-owned banks is just 7-9% per annum, while the average rate offered by joint-stock banks 10-11% and as high 12-12.5% at small joint-stock banks.
Analysts say that the deposit interest rates have been cut by nearly a half compared to the rates of three months ago.
However, as the cash flow to banks has shown signs of slowing down, some banks have had to increase deposit interest rates. Dai A Bank, for example, has raised its offered rate by 0.1% on deposits of three months and more. The bank offers higher interest rates for longer-term deposits.
OCB, after slashing deposit interest rates following the central bank’s basic interest rate cut, has decided to increase the interest rates on nearly all terms of deposits by 0.4-2% per annum.
Some bankers say that the sharp falls of the interest rates have prompted people to plan house purchases instead of injecting money in bank deposits. As for securities, there are no signs that cash is leaving banks for the stock market.
According to Tran Phuong Binh, General Director of Dong A Bank, the lower basic interest rate really serves as an opportunity for banks to reduce input costs. However, Binh said that it is not good if interest rates change a lot and rapidly. Therefore, Binh said, banks are always cautious about changing interest rates.
Meanwhile, many banks have been trying to lure more depositors by offering big promotion campaigns.
ACB, for example, has launched a programme which lasts until December 25, under which the depositors will get 0.1-0.3 taels of ACB gold for 3-6 month term deposits of VND1-10bil or $60-600,000. The total value of the awards of the programme is 3.7 kg of gold, or VND1.5bil.
VIB Bank has launched a programme for VND/US$/EUR depositors worth VND2bil. Clients who deposit VND10mil/US$1,000/EUR500 at least for one month will get valuable gifts, and have a chance to win a special prize – a Mercedes C200K Elegance.
According to the HCM City Statistics Office, the total capital mobilised by the banks in HCM City in the first 11 months of the year was VND559,208bil, just 0.4% more than the same period of last year. Meanwhile, outstanding loans increased by 0.3%, reaching VND486,460bil.
Ho Huu Hanh, Director of the HCM City Branch of the State Bank of Vietnam, also said that the mobilised capital in the locality in December, after the basic interest rate was slashed to 10%, is tending to decrease from November.
Hanh thinks that the cash flowing to banks has decreased slightly, not because the cash is flowing to the stock market, real estate or gold, but because the money is passing between relatives and friends.
Hanh does not think that the basic interest rate will be cut further soon, saying that a too rapid adjustment of the interest rate would make commercial banks unable to respond to the decreases and mobilise idle capital from the public.
DTCK
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