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Savers get less as banks slash rates
Many domestic banks have lowered the yearly interest paid on deposits by as much as 1.5-2 percentage points to an average of about 8 per cent.
The lower interest follows the State Bank of Viet Nam's reduction of its prime rate to 8.5 per cent on Monday.
Interest rates for one-month deposits ranged from 6 to almost 8.5 per cent yesterday.
The rate for six-month deposits ranged from 7.3 to 10 per cent and 6.9 to 9 per cent for 12 months, (see table)
Unlike mid-year, when banks - short of liquidity - paid the highest of interest for the shortest of term deposits, normality seems to be returning so that the longer the term, the higher the interest.
But the interest is only about a third of that paid when money was in short supply.
Flexibility
Commercial banks such as Sacombank, Asia Commercial Bank (ACB) and Techcombank now offer flexible savings-deposit services in an effort to offset the lower interest.
These include products that allow depositors to withdraw their money at any time with deposit rates applying to the moment of withdrawal.
"We often advice depositors to select flexible services because interest rates seem to change so frequently," said an ACB staffer at the bank's Phan Chu Trinh Street, Ha Noi, branch.
"Many customers like our flexible deposit services."
HCM City Institute for Economic Research director Tran Du Lich said: "Deposit interest rates are now quite positive, reasonable and profitable against inflation."
Other economists thought long-term deposits should be preferred.
"I prefer long-term deposits because I'm afraid the interest paid will fall if the prime rate is cut yet again," an HCM City economist, who asked to stay anonymous, told Viet Nam News.
The central bank has reduced its prime rates five times to 8.5 per cent since October in a bid to make more money available for struggling enterprises and a further cut is possible.
Sacombank customer Nguyen Huu Oai, whose deposit term ended yesterday, said: "I very much regret not selecting a longer term so that I could continue to earn 12 per cent.
"I re-deposited for one year."
Caution
Many depositors would prefer to keep their money in the bank rather than buy shares or gold even at the lower interest.
"I can't suffer any further losses with my money in the bank," said Bank for Investment and Development of Viet Nam customer Do Thi The.
"I have just sold some shares; if I had had the money, perhaps I would have kept them till prices rise. But I'm resting my money in the bank where it will earn something each month."
Another customer, Phan Thi Dung said: "tfl had more money, trading gold would definitely be profitable. But I have little savings and any profit I made from gold would be extremely modest."
"So I go to the bank."
The lower interest for deposits should allow banks to further reduce their lending rates making it easier for enterprises to raise loans. The average yearly lending rate at several joint-stock banks in Ha Noi yesterday was about 10-12 per cent popularly. The lowest rate was 8.5 per cent yearly.
Viet Nam News
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