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Interest rates falling deeply, depositors prefer short term deposits
Depositors now prefer short term deposits, as they are still eyeing other investment channels which they hope can bring higher profits than bank deposits.
The General Director of a joint stock bank said that short term deposits are still being preferred as depositors still have not calmed down after the recent heavy interest rate fluctuations. Very few investors make long term deposits these days, as they still plan to inject money in other investment channels like the stock market, real estate and gold.
Short term deposits will allow the investors to get back money and ready for new investment opportunities as soon as the opportunities come.
The East Asia Bank (EAB) is now offering 7.8-8.2% per annum for one to three month term deposits applied to the clients who have less than VND 1 billion, and 8-8.4% to the clients who have more than VND 1 billion. The interest rates for longer term deposits are higher. For example, the rates for 12-month-term deposit are 8.8-9% per annum.
Similarly, VP Bank is offering higher interest rates for longer term deposits. As for the deposits of less than VND 1 billion, the interest rate is 8.4% for 6-9 month term deposits while the rate is just 8.2% for a three-month term deposit. As for the deposits of more than VND 1 billion, the rates are 8.4% per annum for three-month term, and 8.6% for 6-9 month term deposits.
However, despite the higher interest rates for longer term deposits, people still prefer making short term deposits.
Deposits are still flowing into banks these days, despite the continued interest rate decreases. Analysts said that in the last days of the year and just before Tet, investors should not make any business plans now, especially when the real estate market is freezing; therefore, they put their money in to banks, waiting for the new investment opportunities to come next year.
Economists have warned that the real estate market and stock market will not recover before the end of the first quarter of the next year.
Nguyen Viet Hai, General Director of ACB Securities Company, said that there are a lot of business opportunities on the stock market as the stock prices have become very cheap. There have been signs showing that the stock market has bottomed out as the stock prices have been hovering very slightly in the last while. However, as investors still do not feel secure after heavy fluctuations, they still dare not to make investments. Therefore, Hai said, the investors have decided to put money in to banks and wait for new opportunities.
Economists have also pointed out that making deposits at banks are now the most profitable.
Having realized the depositing tendency, some banks have raised the mobilized capital by applying higher interest rates for shorter term deposits. ACB, for example, is setting the highest rate for three-month term deposits at 7.9% per annum. Viet A’s highest rate, 8.4% per annum is also being applied to 3-4 month term deposits. At Sacombank, the new interest rate, effective as of December 16, the highest rate is 8.1% per annum, applied to three-month term deposits, higher than the rates to six-month (7.8%) and nine-month deposits (7.5%). Bankers all said that the disbursement has been going very slowly.
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