Large banks move to change deposit interest rates

16:10 | 23/11/2017 Finance - Banking

In contrast to Vietcombank’s move to cut deposit interest rate a week ago, two other large State-owned commercial banks -- Vietinbank and BIDV -- this week announced they were raising the rate.

Several large banks have raised deposit interest rates - Photo: Internet

According to BIDV’s latest interest rate list, the bank is offering interest rate of 4.8 percent per year for one and two-month deposits, up 0.5 percentage points from the previous list.

The rise was also seen for three-month deposits, up from 4.8 percent to 5.2 percent per year.

Vietinbank also made a similar move, however, it was applicable for medium-term deposits. The bank raised the rate for six and nine-month deposits from 5.5 percent and 5.7 percent to 5.8 percent per year and 12-month deposits from 6.5 percent to 6.8 percent per year.

In contrast, earlier, Vietcombank cut the rate for all terms by 0.1 percentage points, making its deposit interest rate the lowest in the banking system.

Vietcombank’s move is unexpected in the context that capital demand often rises sharply during the latter months of the year.

According to Vietcombank, it cut the rate as its capital source is relatively abundant, adding that despite the low rate, the amount of deposits to the bank has remained high thanks to its good reputation.

Commenting on the move, banking expert Nguyen Tri Hieu said the change in deposit interest rates among the banks probably comes from different capital needs.

Some banks reduced the deposit interest rates to restructure their capital source, while others increased the rates due to strong demand for loans at the end of the year, he said.

Besides this, the credit growth target for the banking industry this year is over 20 percent, however, it grew by only 13.6 percent until the end of October. It means banks will have to accelerate in the last two months of the year to meet the target, according to Hieu.

In the inter-bank market, liquidity in the banking system also reduced over the past few weeks, pushing the inter-bank rate to a four-month high.

A report on the currency market by SSI Retail Research showed that inter-bank interest rates have maintained an upward trend for a month with a strong increase.

In the past week, the rate increased significantly by 20-34 basis points for all terms. Specifically, overnight rates increased by 26 basis points to 1.3 percent, exceeding the 1 percent threshold for the first time after four months.

According to SSI’s analysts, similar to the same period in 2016, these developments are not surprising because liquidity demand will continue to rise as the peak season at the end of the year is approaching.

On the Open Market Operation, the central bank last week issued bills worth 1.9 trillion VND (83.7 million USD) against 11 trillion VND in the previous week, while the maturity value was 12.2 trillion VND.

Theo VNA