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Commercial banks rushing to push interest rates over 9%   2009-05-05 - VietNamNet

Commercial banks all have been raising deposit interest rates in an effort to attract more capital. The banks need more capital to serve disbursement plans as interest rate subsidy programmes are in full swing.


Saigon-Hanoi Bank (SHB) has announced the ‘super attractive savings programme 3+’ which has been applied for April 2 – June 2. The programme offers very attractive interest rates of up to 9.3% per annum for 36-month term deposits, while people have opportunities to get the bonus interest rate of 0.25% per annum.


Prior to that, SHB was one of the banks which raised interest rates most sharply, offering the normal interest rate of up to 8.8%, exceeding the peak of 8.7% Saigon Thuong Tin Bank set just one week before in late April.


Not only joint-stock banks, some big banks including Vietcombank, the Bank for Investment and Development of Vietnam (BIDV), Vietinbank, have also joined the interest rate race.


Vietinbank has issued deposit certificates, offering interest rates as high as 9% per annum for 36-month term deposits, the highest interest rate now available on the market.


Together with interest rate increase programmes, banks have also resumed offering impressive promotion programmes after a quiet period. The promotion programmes are believed will help lure more clients in the context that banks cannot push deposit interest rates up any further.


Maritime Bank has also launched a promotion programme, offering nearly VND1bil worth of prizes, applied to those who open fixed-term deposits. The interest rate under the programme has been pushed up to 9.3% per annum for 48-month term deposits, 9.2% for 36-month and 8.15% per annum for 12-month.


Meanwhile, ABBank hopes that it can lure depositors with the savings product series ‘accumulating for the future’. Clients who join the programme can enjoy high interest rates, get life insurance policies, and do not lose money if they withdraw capital before the deposits mature. Depositors will be given 100% of life insurance premiums with the insured sum of money of up to VND2.4bil.


Interest rate increases have also been seen on the interbank market. The interbank interest rate has climbed to 9% per annum for 12-month term loans, while the rates are tending to increase on all terms of deposits.


The noteworthy thing is that most banks have focused on raising interest rates on long-term deposits with the biggest changes occurring with over 12-month term deposits. Meanwhile, the interest rates for less than 12-month term deposits prove to be stable, hovering around 8% per annum.


Banks say that they have to raise long-term deposit interest rates because they need to well prepare for the disbursement under the second demand stimulus programme which aims to support businesses’ investment plans.


The interest rate increases prove to be unavoidable as the mobilised capital volume in Hanoi and HCM City in Q1 increased slowly, as deposit interest rates were low to attract depositors. Meanwhile, the warming up of other markets, including gold, dollar and stock markets, have been luring people as alternate investment channels.


Meanwhile, the State Bank of Vietnam has announced the same basic interest rate at 7% for May, which means the ceiling lending interest rate of 10.5%. This will lead to the fact that banks have to mobilise capital at higher interest rates, but have to lend at the same low interest rates.

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