Trang Chủ
Since the beginning of this year, interest rates on dong and dollar deposits have continued to rise despite banks promises to stabilise rates.
According to an agreement made among domestic banks in September last year, the six-month rate for a dong deposit was set at 0.65 per cent per month, and 7 per cent for a 12-month rate.
Rates for non-term deposits by individuals and corporations were 0.25 per cent and 0.2 per cent per month, respectively.
Domestic banks have in general applied these rates on deposits but have increased rates on deposits with terms of 13 months, seven months and five months as well as bonds and bills.
At the Asia Commercial Joint Stock Bank (ACB), the bank since March 3 has increased rates for its US dollar deposits from 0.3 per cent to 0.85 per cent.
The Bank for Foreign Trade of Viet Nam (Vietcombank) raised rates on Vietnamese dong deposits from 0.2 to 0.6 per cent.
Truong Dinh Song, of the Viet Nam Bankers Association, said the decision was to make deposits more attractive to customers, to maintain market share and ensure capital for liquidity activities.
Le Dac Son, general director of the Joint Stock Bank for Private Enterprises (VP Bank), said domestic banks had to adjust their deposit interest rates because the US Federal Reserve had increased its interest rate on US dollar deposits.
"Companies and individuals often outline their trading and production plans in the first six months of the year, and bank loans often rise sharply then," Son said. "To meet capital demand, banks then decide to raise their deposit interest rates."
Pham Phan Dung, director of the Ministry of Finance Banking and Finance Department (BFD), disagreed with the need to do so.
"Interest rates on Government bonds being traded on the inter-banking market were "still stable and capital from this market is very high," he said. "This proves that domestic commercial bank available capital sources are still plentiful, meeting market demand."
However, An Thanh Son, deputy director of the joint stock Viet Nam International Bank (VIB), said most joint-stock banks like VIB had recently appeared on the market so they must use interest rates as a way of generating capital.
"Many commercial banks have increased their interest rates so it does't make sense if we don't do it," Son said.
Vietcombank General Director Vu Viet Ngoan, however, said the interest rates of domestic banks were rather high relative to market demand.
Risks
Dung of BFD warned that domestic banks were putting themselves at financial risk by raising deposit rates.
"Domestic bank deposit interest rates now average 8.5 per cent per year while rates for loans stand at only 9 per cent per year. This proves that bank efficiency is very low," he said.
Pham Huy Hung, general director of the Viet Nam Industrial Commercial Bank (ICB), said domestic banks mobilised capital had increased by 34 per cent compared with the same period last year, while their loans went up by only 16 per cent.
"This means that domestic banks are facing capital excess," Hung said. "It is very dangerous for banks business operations."
Other industry insiders said that when domestic banks increased their deposit interest rates they also had to increase rates on loans to make up for the loss.
Businesses with these bank loans could end up with more bad debt, they said.
Source: Vietnam News, June 30
