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Deposit interest rates break ceiling, hope for low-cost capital dashed
The deposit interest rates have been increasing again. While small banks offer high interest rates for 3-6 month term deposits, big banks offer high interest rates to lure long term capital.
Nguyen Van Hai, who has got a big sum of money after he sold a house, intended to deposit his money at the Thanh Xuan branch of a joint stock bank. At first, Hai was told by the credit officer that he would enjoy the interest rate of nine percent per annum – the currently applied ceiling interest rate.
However, later, when realizing that Hai wanted to deposit 2 billion dong, a huge sum of money, the credit officer told him that the bank can pay 11 percent per annum for six month deposit. Meanwhile, if Hai deposits the money for 12 months, he would get the higher interest rate of 12 percent per annum.
Huy, a credit officer of a bank branch on Ngo Quyen Street in Hanoi, said his bank now prioritizes to attract short term (3-6 month) deposits. The long term deposits (more than 12 months) would enjoy the interest rates of up to 11 percent per annum. However, the bank would offer preferences to those who have big deposits.
Those, who deposit one billion dong or more, for example, would get 9.5 percent per annum for 3 month deposits, and 10.5 percent for six month deposits.
The deputy head of a credit division of a bank branch in Ha Dong district said his bank now pays 11 percent per annum for short term (less than six months) deposits, while it restricts the disbursement at this moment.
“We do not intend to push up lending, and we only provide loans to good projects. Therefore, we have no liquidity problem. Therefore, we do not focus on mobilizing long term capital,” he explained.
In fact, the interest rates have been unstable; therefore, depositors themselves do not want to make long term deposits.
However, while small banks are not interested in long term deposits, the big guys seem to try to attract the capital.
The Asia Commercial Bank ACB has announced that since September 12, it pays 13 percent per annum at maximum to those, who deposit for 13 months. The interest rate of 12.5 percent per annum has been applied to 12 month deposit. Meanwhile, the rate for 24 month and 36 month deposits has also been raised to 11.5 percent and 12 percent, respectively.
Eximbank has also announced the new interest rates applied since September 12. The 13 month deposit interest rate has been raised to 12.8 percent per annum. Prior to that, 12 percent was the highest interest rate offered.
Nguyen Thanh Toai, Deputy General Director of ACB, said most of the loans provided by the bank are long term ones, which has prompted the bank to seek long term capital to balance the capital structure.
While the mobilized capital has been increasing rapidly, the lending has been going very slowly because there are not many clients who can satisfy the requirements set by the banks to be eligible for loans.
By August 2012, the credit growth rate of the whole banking system had reached 1.4 percent, while the mobilized capital had soared by 11.23 percent.
Cao Sy Kiem, a well-known economist, who was once the Governor of the State Bank of Vietnam, said he can see problems in the bank liquidity. Money has been flowing into big banks, while small banks have to raise the deposit interest rates to retain clients.
Kiem also said that though banks have raised interest rates for long term deposits, they would not be able to attract much more long term capital, because depositors now prefer making short term deposits
vietnamnet
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