Interest rates continue to increase

The wave of increasing deposit interest rates has spread widely in recent days when many state-owned banks added interest rates of 0.2-0.4% for many terms to attract depositors.

Last weekend, the Bank for Investment and Development of Vietnam (BIDV) officially applied new deposit interest rates. Accordingly, the bank increased short-term deposits by about 0.3%, of which the 3-month term increased to the maximum level of 5.5% (previously around 5.2%), the 12-18-month term increased from 6.5% to 6.8%. The 36-month term is currently the highest at this bank, up to 7.2%, an increase of 0.4%.

Similarly, VietinBank also strongly adjusted deposit interest rates, in which the strongest increase was the 12-24 month term deposit interest rate, from 6% to 6.8%. Some other terms increased by 0.3% such as 3-6 month term to 5.5%, 6-9 month term to 5.8%. In addition, Vietcombank also increased the deposit interest rate by 0.2-0.5% for each term.

About a month earlier, the market had also recorded interest rate adjustments by a series of joint stock banks. For example, at VPBank, the highest listed interest rate was 7.9% per year, but applied to certificates of deposit from 36 months. Similarly, at SeaBank, on the bank's website, an interest rate of up to 8% for a 13-month term was listed, but with the condition that the customer had been a regular for many years and deposited several hundred billion VND or more...

Analysts say that the average capital mobilization interest rate has increased by about 0.2-0.5% compared to before Tet. This reflects the increased demand for capital for development and is a positive sign.

Accordingly, Mr. Nguyen Hoang Minh, Deputy Director of the State Bank of Vietnam, Ho Chi Minh City branch, said that,The credit growth target for this year is set at 18-20%, while the average credit growth rate in recent years has been about 10-15% per year, requiring banks to have abundant mobilized capital to meet credit growth needs.

In addition, according to Mr. Minh, some banks have recently adjusted their interest rates slightly higher, partly to address the imbalance between the terms of mobilization and lending. In addition, according to the draft amendment to Circular 36 that the State Bank is publishing for comments, commercial banks are allowed to use short-term capital for medium- and long-term lending at a maximum rate of 40% instead of 60% as at present.

"Therefore, this may also force banks to increase their mobilization of medium- and long-term capital to meet the 40% ratio, and still be able to continue lending medium- and long-term," he said.

Meanwhile, experts are paying attention to the liquidity issue of banks. At a recent conference, Mr. Le Duc Thuy, former Governor of the State Bank, said that liquidity pressure is increasing.

According to Mr. Thuy, there needs to be analysis of the current imbalance between domestic and foreign capital mobilization and lending. Vice Chairman of the National Financial Supervision Committee Truong Van Phuoc also pointed out the shortcomings in the rapid increase in medium and long-term loans, putting pressure on interest rates.

In addition, another reason pointed out by experts is that some banks are currently having to continuously mobilize new deposits to pay interest on old deposits and uncollected interest. Expert Nguyen Xuan Thanh also said that there should be a form of warning about this risk soon, although he admitted that "naming and shaming" each bank may have to be cautious. However, he also noted that there are banks with interest of thousands of billions of VND in one period, which is alarming.

Forecasting the interest rate developments in the coming months, banking experts all believe that it will continue to stand at a high level and even have a slight upward trend. Because the demand for medium and long-term capital mobilization of banks is very high.

"Interest rates are continuing to increase and according to our calculations, they could increase by 1-2% compared to the 2015 level. So it cannot be simply said that businesses can still expand production and business normally like last year," said Mr. Le Duc Thuy.

Speaking to VnExpress recently, Mr. Bui Quoc Dung - Director of the Monetary Policy Department of the State Bank also said that the task of keeping interest rates stable as they are now is "a big challenge".

According to VNE