Beware of information disturbances about interest rates jumping to double digits

The race for deposit interest rates has been heating up in recent days, especially after the State Bank of Vietnam (SBV) decided to sharply increase a series of operating interest rates for the second consecutive time on October 24.

And now, just one week after the decision of the Operator, the interest rate mobilized at some commercial banks has even reached 2 digits. However, in reality, to enjoy this interest rate is not easy. Even the actual interest amount that customers receive is much lower than the rate announced by the bank due to the bank's advertising "trick".

NamABank has recently become a "phenomenon" in the market when it posted a high interest rate of up to 11%/year for individual customers. This is the interest rate applied for a 9-month term in the Happy Future deposit mobilization program.

However, it is worth noting that this attractive interest rate is not applied for the entire deposit term but only for the first 3 months. In the next 6 months, the interest rate will be adjusted to 5.95%/year.

Thus, on average, the interest rate for deposits under this product is only 7.63%/year, which is not really attractive compared to the interest rates of some other banks at the same term. Meanwhile, if depositing under the program, customers are not allowed to withdraw before maturity. Accordingly, the above 11% rate is just a "trick" to attract the attention of depositors.

Similarly, for other terms, the high interest rate is only applied for a certain period of time, after which the customer will receive an interest rate of 5.95%/year. Specifically, in the case of a 12-month deposit, the first 6 months have an interest rate of 9.9%/year, the next 6 months is 5.95%/year; for an 18-month term, the first 12 months have an interest rate of 8.9%/year, the next 6 months is 5.95%/year...

Another bank that is also offering double-digit interest rates is NCB at 10.5% per year. However, to enjoy this interest rate, individual customers must deposit at least VND500 billion in the bank. In addition, before depositing money, customers need to contact the bank and get NCB's approval.

According to experts, in the current period when banks are "racing" to increase deposit interest rates, it is not new for some members to use advertising "tricks" to attract deposits from the public. However, this also means that depositors need to read .

Internet photo.

Interest rate movements of banks remain complicated

In the context of increasing exchange rate pressure due to unfavorable domestic and foreign factors, on October 24, the State Bank increased the operating interest rate by 100 basis points before the US Federal Reserve's (Fed) policy meeting in November.

With the above adjustment, the interest rate level is about 50-100 basis points higher than before the COVID-19 pandemic. This interest rate increase does not cause too much surprise to the market, however, according to the assessment of analysts at SSI Research, the development of mobilization interest rates at commercial banks (CBs) is still quite complicated.

Commercial banks in the system have all adjusted to increase by 30-100 basis points depending on the term, in which the term under 6 months at most commercial banks has been pushed up to the ceiling of 6%.

Not only increasing interest rates, banks also promote promotional programs, adding interest rates to attract idle cash flow from residents.

According to experts, up to now, the mobilization interest rates of many banks have returned to the pre-COVID-19 pandemic level, or even higher, with an average increase of 300-400 basis points compared to the end of 2021.

Regarding credit growth, newly updated data from the State Bank shows that as of October 20, and compared to the end of 2021, credit increased by 11.38%, M2 increased by 3.09% and capital mobilization increased by 4.8%. Thus, the difference between capital mobilization and credit has been negative since July and has somewhat improved slightly (although not too clearly), after the mobilization interest rate level has increased sharply in the past 2 months.

At the regular meeting of the Government, the State Bank also said that capital mobilization and credit developments in 2022 have posed challenges to the very high capital utilization ratio of the banking system, causing concerns about the liquidity of the banking system.

Therefore, the State Bank's adjustment of operating interest rates in September and October is appropriate to ensure that credit institutions are able to mobilize additional capital to ensure liquidity safety, and have the conditions to supply credit capital to the economy.