Banks under pressure of deposit rate increase

After continuously reducing, deposit or reward interest rates have recently increased back as commercial banks have managed to increase their capital source for lending to meet this year’s credit growth rate target and bad debt provision.

Deposit interest rate increase pressure is unavoidable (Photo: SGGP)

Deposit interest rates for 12 month term sometimes dropped to the record low levels of only 6.5-7 percent a year. However this trend has seemed to stop and move in the opposite direction at a number of commercial banks. 

Military Bank has increased the Vietnamese dong deposit rate by 0.1-0.2 percent for three-eight month terms since June 5.

DongA Bank hiked the rate from 5.6 percent to 6 percent for nine month term and 5.3 percent to 5.5 percent for six month term. Other terms have also seen it slightly up.

Asia Commercial Bank lifted the reward rate up by 0.2 percent for 12, 24 and 36 month terms.

Besides joint stock commercial banks, state commercial banks have also increased their deposit rates.

The Vietnam Bank for Agricultural and Rural Development has raised it by 0.3 and 0.5 percent touching 6.5 and 6.8 percent for 18 and 24 month terms.

A survey shows that the reward interest rates have edged up an average of 0.08 percent after falling to their rock-bottom levels.

Continuous failures of bond bidding sessions have also signaled the deposit rate increase to mobilize capital.

The liquidity of many banks is not good forcing them to raise reward rates.

Data from the National Financial Supervisory Commission shows that credit growth rate in the first quarter this year hit 1.91 percent and deposit growth rate reached only 0.98 percent.

Experts said that loan growth rate was higher than deposit rate sending banks to hike the reward rate.

On the other hand, banks have intensified individual consumption lending with many attractive promotional programs to obtain the credit growth rate target of 15-17 percent set for this year, which is much higher than that in recent years.

According to first quarter financial reports from banks, deep debt rate has been on the rise since the beginning of the year, especially after April 1 when the State Bank of Vietnam’s decision to extend debt payment time expires. Commercial banks have also had to increase the sale of their bad debts to the Vietnam Asset Management Company.

These have forced them to ram up capital mobilization for provision and better liquidity.

By Xuan Anh – Translated by Hai Mien

Other news

Most view

Search and rescue forces off the island (Source: VNA)

Last body of Phuket boat accident found

Thai authorities have recovered the last body from the boat accident off the southern resort island of Phuket, raising the death toll to 47.

Economy

Vocarimex plans to expand export markets

The Vietnam Vegetable Oil Industry Corporation -Vocarimex (code: VOC) has set its target the 2018 revenue will reach VND 4,8trillion, an increasing of 9 percent compared to 2017 and pre-tax profit target will be VND 300 billlion ($ 13 million), dividend payment ratio at 12 percent.

 

Self - introduction

VNPT targets to be leading digital service provider in Vietnam

The grand opening ceremony of the VNPT-Information Technology Company (VNPT-IT), a new member of the Vietnam Posts and Telecommunications Group (VNPT), was held yesterday in Hanoi. With thousands of IT engineers and the focus on developing state-of-the-art technological products related to Artificial Intelligence (AI), Bigdata, and Blockchain, the new company is considered the main force to help VNPT fulfill the goal of becoming a leading digital service provider in Vietnam and an important Digital Hub of the neighborhood as well as the world.

Stock market

BLF & LUT fined VND 145mln

The State Securities Commission of Vietnam (SSC) has just issued administrative fines worth VND 145 million to Bac Lieu Seafood Corp (BLF) and Luong Tai Investment & Construction Corp (LUT).