Illustrative image. (Photo: haiquan.vn)Hanoi (VNA) – Some commercialbanks have entered a new interest rate hike race to lure medium- and long-termdeposits, pushing the rate to a record high of more than 9 percent per year.
VPBankannounced it has offered a rate of 9.2 percent per year for five-yearcertificates of deposit.
VietABank has also listed a high rate of 8.2 percentper year for certificates of deposit with tenure of just six to 18 months.
The rateat Sacombank is also at 8.2 percent per year; however, it is applicable forcertificates of deposit with tenure of 5-7 years.
The rateis much higher than the average deposit interest rates offered by othercommercial banks. Currently, State-owned commercial banks offer a rate of6.5-6.8 percent per year for long-term deposits, while it is 7-7.5 percent atlarge-sized joint stock commercial banks and 8-8.2 percent at small-sized banks.
Analystsattribute the hike to factors such as the need for medium- and long-term fundsto grow lending this year.
Manyexperts anticipated the scenario and warned there would be rising demand forlong- and medium-term funding after they saw the economy clearly recovering andthe Government signing a series of bilateral and multilateral trade agreements,which is likely to increase businesses’ demand for funds.
Anotherreason is that 80-90 percent of deposits currently are short-term while demandfor long- and medium-term loans is growing rapidly.
StateBank of Vietnam (SBV)’sHCM City branch reported that last year the ratio between short-term and long-and medium-term loans was 44:56 percent. It is normally 50:50.
Inaddition, SBV’s amendments to Circular 36/2014/TT-NHNN reducing the ratio ofshort-term deposits that can be used for medium- and long-term loans from thecurrent 60 percent to 40 percent has caused deposit interest rates to rise.
Besidesthis, the risk weight for loans to the real estate sector has also been raisedto 250 percent from 150 percent since 2017.
Asa result, banks have been forced to hike interest rates on long-term depositsso that they have enough funds to provide long- and medium-term loans.
Expert BuiQuang Tinsaid the interest rate hike would put pressure on the central bank’s monetarymanagement this year, especially when the central bank has to meet the threetargets of controlling inflation, keeping foreign exchange rate and interestrate stable.
Tinwas also concerned it would be hard for lending interest rate, especiallymedium and long term, to be steady in the wake of the deposit rate hike. Bothlending and deposit rates would rise by roughly 0.5-1.5 percent per year this year, he forecast.-VNA
VPBankannounced it has offered a rate of 9.2 percent per year for five-yearcertificates of deposit.
VietABank has also listed a high rate of 8.2 percentper year for certificates of deposit with tenure of just six to 18 months.
The rateat Sacombank is also at 8.2 percent per year; however, it is applicable forcertificates of deposit with tenure of 5-7 years.
The rateis much higher than the average deposit interest rates offered by othercommercial banks. Currently, State-owned commercial banks offer a rate of6.5-6.8 percent per year for long-term deposits, while it is 7-7.5 percent atlarge-sized joint stock commercial banks and 8-8.2 percent at small-sized banks.
Analystsattribute the hike to factors such as the need for medium- and long-term fundsto grow lending this year.
Manyexperts anticipated the scenario and warned there would be rising demand forlong- and medium-term funding after they saw the economy clearly recovering andthe Government signing a series of bilateral and multilateral trade agreements,which is likely to increase businesses’ demand for funds.
Anotherreason is that 80-90 percent of deposits currently are short-term while demandfor long- and medium-term loans is growing rapidly.
StateBank of Vietnam (SBV)’sHCM City branch reported that last year the ratio between short-term and long-and medium-term loans was 44:56 percent. It is normally 50:50.
Inaddition, SBV’s amendments to Circular 36/2014/TT-NHNN reducing the ratio ofshort-term deposits that can be used for medium- and long-term loans from thecurrent 60 percent to 40 percent has caused deposit interest rates to rise.
Besidesthis, the risk weight for loans to the real estate sector has also been raisedto 250 percent from 150 percent since 2017.
Asa result, banks have been forced to hike interest rates on long-term depositsso that they have enough funds to provide long- and medium-term loans.
Expert BuiQuang Tinsaid the interest rate hike would put pressure on the central bank’s monetarymanagement this year, especially when the central bank has to meet the threetargets of controlling inflation, keeping foreign exchange rate and interestrate stable.
Tinwas also concerned it would be hard for lending interest rate, especiallymedium and long term, to be steady in the wake of the deposit rate hike. Bothlending and deposit rates would rise by roughly 0.5-1.5 percent per year this year, he forecast.-VNA
VNA
