A series of Vietnamese banks have lifted interest rates on deposits by 10-20 basis points (bps), mainly of short terms to meet rising demand for loans, the Tuoi Tre (Youth) newspaper reported.
An Binh Commercial Bank (ABBank) has lifted rates by 20 basis points on deposits having terms of one, two and 12 months.
Similarly, Eximbank adds 10 bps to deposits of one, two and six months, to 4.5%, 4.6% and 5.5% per year. The Ho Chi Minh City-based bank also offers an additional 10-30 bps points for clients who sells U.S. dollar and gold and switch to depositing in the dong at the bank.
Demand for loans usually rises as businesses need finances to carry out projects and to stockpile goods for the Tet holiday season.
Moreover, there are other factors behind the increases in interest rates. The State Bank of Vietnam (SBV), the country’s central bank, has sold foreign currencies to intervene in the money market and take the dong back, causing a temporal shortage of liquidity in the dong.
In addition, some banks have had their credit growth quotas loosened, resulting in higher demand for mobilization.
Nguyen Hoang Minh, deputy director of the SBV-Ho Chi Minh City branch, said that mobilization in the city has increased 15.5% from the end of 2014, higher than a 13% expansion of credit. The loan-to-deposit ratio of banks in the city stays around 80%.
A number of Vietnamese economists have voiced concerns that although financial costs in Vietnam have declined, they remain high, undermining profitability and competitiveness of businesses.
Nguyen Duc Long, deputy director of the SBV’s Monetary Policy Department, tipped that total outstanding loans could grow 18% this year, higher than the initially targeted 13%-15% growth.
Vietnam’s gross domestic product could increase 6.6%-6.62% this year, said Le Dang Doanh, former director of the Central Institute for Economic Management, at a seminar held by BizLIVE last weekend.