Bank deposit rates drop further

07-Mar-2015 Intellasia | The Saigon Times | 6:00 AM Print This Post

Some banks have cut their short-term deposit rates after the long traditional Lunar New Year holiday, or Tet, making this investment channel less attractive to depositors.

DongABank has lowered its one-month deposit rate from 4.8 percent to 4.3 percent per annum while those of three months and six months have dropped from 5 percent to 4.9 percent and from 5.9 percent to 5.3 percent respectively.

Meanwhile, Sacombank since mid-February has reduced its interest rate for one-month deposits from 4.65 percent to 4.3 percent per annum and three-month deposits from 4.9 percent to 4.6 percent per annum.

In January, most banks offered the rate for the 12-month tenor at 6 percent but now they have lowered it to 5.7 percent.

However, some small lenders have still applied higher rates than those of the banks with the majority State ownership. For instance, Vietcombank offers the rate for the six-month tenor at 5.3 percent, compared to 6.2 percent at Ocean Bank and 6.74 percent at Saigon Commercial Bank (SCB).

Nguyen Hoang Minh, deputy director of the central bank’s HCM City branch, said banks based in the city had reported a 0.53 percent decline in deposits in the first two months of this year against late last year.

Truong Dinh Long, deputy general director of Orient Commercial Bank (OCB), said individual and corporate clients had high cash demand for shopping, and wage and bonus payments before Tet, making banks less liquid. However, OCB has recently seen a recovery of deposits with over VND900 billion mobilised last month, up 6-8 percent against the previous month.

Some banks have reduced short-term deposit rates to cut costs and this may not leave much impact on their capital mobilisation. Some lenders have also sped up lending to obtain credit growth of 13-15 percent this year, Minh said.

According to the HCM City Statistics Office, the city’s total mobilised capital had reached over VND1,300 trillion as of early February, falling 0.5 percent against the previous month but rising 17 percent versus last year’s early February.

City banks report lending improvement

* HCM City-based banks reported slight credit growth in the first two months of this year, according to the central bank’s HCM City branch.

Ending February, local banks reported VND1,100 trillion in total outstanding loans, up 1.1 percent against late last year. This is a positive sign as banks often see negative credit growth in the first four or five months of year, said Nguyen Hoang Minh, deputy director of the central bank’s HCM City branch.

As this year’s Tet came late, at nearly the end of February, enterprises, small traders and individuals strongly took out bank loans to prepare for business activity and shopping, Minh explained.

Banks have also focused on seeking borrowers and loosened lending since early this year. Earlier this year, 19 banks in the country pledged to offer VND128 trillion worth of preferential loans to enterprises.

According to a bank leader, his bank has reported bustling lending activities this year thanks to promotional programmes. The lender has focused on small businesses with good operations.

In recent times, many individuals have also taken out loans to buy properties and automobiles, the banker added.

Truong Dinh Long, deputy general director of OCB, said there have been signs for strong credit growth this year such as the stable macro economy, the recovery of the economy, the warming real estate market, and good exports and imports.

In addition, the government has launched preferential credit programmes for enterprises and plans to cut interest rates further. At present, short-term lending rates are around 7-8 percent per annum while medium to long-term rates (for individual borrowers) are from 10-11 percent per annum.


Category: Finance, Vietnam

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