Banks raise dong deposit rates to improve liquidity

HDBank has increased its rates by 0.3 percentage to 5 percent per year on one-month deposits, 5.7 percent on terms between six and 11 months, and 6.5 percent on deposits above 12 months.

DongA Bank pushed its interest rates by 0.1-0.3 percentage, while deposit rates at Eximbank were revised by 0.2-0.4 percentage.

The rise came a few weeks after some large lenders such as Agribank and ACB announced increases in their interest rates on long-term dong deposits to improve liquidity amid the pressure of a stronger US dollar.

Interest rates on deposits above 12 months are currently one percentage higher than the deposits for other terms.

Attempting to lure depositors, private commercial joint stock banks are currently offering interest rates of roughly 0.8 percent higher than that by State-owned commercial joint stock banks.

According to Tuoi tre (Youth) newspaper, Truong Van Phuoc, Vice Chairman of the National Financial Supervision Commission (NFSC), noted that banks had raised interest rates to improve liquidity and it was a normal practice and not a basis for them to hike lending rates accordingly.

Financial expert Nguyen Tri Hieu observed that although inflation remained stable, with CPI in May rising 0.16 percent over the previous month and up 0.95 percent year-on-year, a stronger US dollar recently affected capital mobilisation as some people withdrew their dong savings to buy the dollar; hence, banks had to raise dong deposit rates to attract capital.

The NFSC last month said that deposit rates were under pressure and set to rise as the growth rate of deposits had been lower than that of credit.

The total deposits rose 0.98 percent in the first quarter, while the total outstanding loans increased 1.7 percent, in which outstanding loans in dong climbed 2.4 percent and outstanding loans in foreign currencies dropped 0.9 percent, NFSC said.

As a result, the loan-to-deposit ratio rose to 84 percent from 83 percent in December 2014, of which LDR in foreign currencies climbed to 87 percent from 83.4 percent at the end of 2014, the NFSC reported.

Experts said that the deposit interest rate rise was a positive signal as it showed that capital demands were recovering.

According to statistics from the State Bank of Vietnam, credit growth in the first five months this year rose 4.8 percent, much higher than the 2.3 percent hike in the same period last year./.

Source: VNA