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Joint-stock banks doing interest rates their own way
Commercial banks promised the State Bank of Vietnam in late May 2009 that they would slash US$ deposit interest rates to 1.5 percent per annum at the highest and lending rates to 3 percent. However, banks have not fulfilled their commitments.
To date, only state-owned banks, including Vietinbank, BIDV, equitised Vietcombank and joint stock DongA Bank, have slashed US$ interest rates to the committed levels. Meanwhile, other banks have taken no action. Some banks are still applying high interest rates of over 3 percent per annum.
The State Bank of Vietnam has been applying a lot of measures in an effort to ease the short supply of foreign currencies. It has decided to impose the fine of 30 million dong on the act of quoting goods’ prices in foreign currencies, inspected foreign currency exchange shops, and especially, has urged commercial banks to slash US$ interest rates in order to make US$ loans more attractive to importers. The Vietnam Banking Association also had a meeting with its member banks on slashing US$ interest rates.
In return for the efforts, commercial banks committed to slash US$ interest rates to 1.5 percent for deposits and 3 percent for loans.
However, 10 days after banks made the commitments, they are still mobilising US$ capital at interest rates higher than 1.5 percent. Asia Commercial Bank (ACB) said on June 9 that it was still applying the highest interest rate at 3.1 percent per annum for 36-month term deposits, provided that clients deposit more than $200,000. As for 12-month term deposits, ACB is now offering the rate of 2.6 percent per annum for deposits of less than $10,000.
Similarly, Eximbank is also applying deposit interest rates of 1.85 to 2.5 percent per annum (10-12 month term deposit). Eximbank’s General Director Dao Hong Chau said that as the bank has advantages in import and export, the demand for US$ loans from the bank, though having decreased, is still high. Therefore, Eximbank needs to arrange enough capital to meet the demand for loans.
Chau said that in general, if lending US$ interest rates decrease to 2 percent per annum at the lowest, this helps attract more enterprises to borrow in dollars. Credit growth has improved in comparison with late last year, but mainly because of VND loans.
According to General Director of Viet A Bank Pham Duy Hung, the bank has not lowered the deposit interest rate to 1.5 percent at the highest because it is still listening for news from other banks. Viet A’s highest rate is now 2.7 percent applied for 36-month term deposits.
However, Hung said that Viet A is considering slashing interest rates this week.
“If banks cannot sell dollars, they certainly do not want to maintain high deposit interest rates,” Hung said.
US$ interest rates have been on the decrease and are now just equal to 1/3 of VND rates. Meanwhile, VND interest rates have been on the rise as banks are lacking VND capital for disbursement. The highest VND interest rate is now reportedly at 9.8 percent per annum.
According to the State Bank of Vietnam, the total deposits at banks in May 2009 increased by 3.87 percent over the end of last year. Of this amount, VND deposits increased by 4.6 percent and foreign currency deposits by 1.33 percent.
VietNamNet, DTCK
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