Many banks increase deposit interest rates sharply

Race to raise interest rates

Many banks are quietly increasing interest rates compared to the listed rates with many “negotiated interest rates”. A month ago, the mobilization interest rate of 7.8%/year, 8%/year was rare and only applied to large deposits, but now it is applied quite commonly, even to small deposits.

Most joint stock commercial banks apply interest rates of 8 - 8.5%/year, such as SCB, VietBank, HDBank, Bac A Bank... Only large banks such as VietinBank, Vietcombank, BIDV, Agribank have slightly increased.

Banks, especially joint stock commercial banks, are in a race to increase interest rates and attract capital. Photo: Thu Huyen

Not only increasing deposit interest rates, along with the race to mobilize capital, banks are racing to issue deposit certificates with high interest rates to attract long-term capital.

At HDBank Nghe An branch, interest rates are increasing sharply, without specifying the amount of deposit. On October 26, the 6-month interest rate of this bank was listed at 7.2%/year; in the morning, the staff here said that the interest rate plus programs was 8.8%/year. And in the afternoon, it even increased to over 9%/year (while the day before it was only 8.2%/year); Bonds are around 10-11%/year.

At VietBank, with a deposit of 200 million VND, the current interest rate is 8.6%/year for a 12-month term; 8.9%/year for a 15-month term - much higher than a few months ago and continuously fluctuating upwards.

Interest rates of over 8.0%/year are common at banks. Photo: Thu Huyen

Ms. Nguyen Thi Thu Huong in Hung Phuc Ward, Vinh City said that she recently went to VietBank to deposit savings. Although the listed interest rate was higher than 2 weeks ago, when negotiating, the bank staff also flexibly adjusted it to increase. 2 weeks ago, I deposited 300 million VND, the interest rate of 8.0%/year for a 6-month term was quite high, but now it has continued to increase to 8.3%/year.

“The increase in interest rates has also made depositors dizzy. Last week, I was informed by staff of several banks that they were increasing their deposit interest rates. I was wondering which bank to choose, but at the beginning of this week, they continued to increase. In just a few days, some banks have increased their deposit interest rates twice, even increasing them by the day,” Ms. Huong shared.

Mr. Tran Manh Ha - Director of HDBank Nghe An branch said: Since the beginning of the year, the branch's mobilized capital has grown strongly, increasing by 1,000 billion VND compared to the beginning of the year; The growth rate of mobilization and credit both reached over 25%.

The trend of increasing deposit interest rates has not stopped, with interest rates above 8%/year appearing more and more. Mr. Ha also predicted that deposit and lending interest rates will continue to fluctuate and increase, possibly "hotter" at the end of the year.

Daily fluctuating interest rates also make depositors wonder about choosing a bank and when to deposit. Photo: Thu Huyen

Regarding the reason for the "hot" increase in deposit interest rates, some banks said that the reason is that since the beginning of the year, the economy has recovered after the pandemic, the demand for credit capital has grown strongly, while capital mobilization has increased slowly. In addition, due to global inflation remaining high, the US Federal Reserve (Fed) has adjusted the target interest rate 5 times to 3-3.25%/year and is forecast to continue to increase in the last months of 2022 and 2023, the USD has appreciated strongly, increasing pressure on domestic interest rates and exchange rates, creating pressure on inflation...

To continue to synchronously implement measures, contributing to controlling inflation, stabilizing the macro-economy and currency, and ensuring the safety of the banking system, the State Bank has just decided to adjust the operating interest rates by 1%, effective from October 25, 2022. And after the adjustment by the State Bank, many commercial banks have announced new deposit interest rates.

Dmeet the liquidity needs of credit institutions

The increase in deposit interest rates has pushed lending interest rates to a new level. Even for savings book mortgage loans, most banks apply interest rates that are 2.7 - 3% higher than deposit interest rates for the same term. A representative of the State Bank said that the increase in deposit interest rates has pushed lending interest rates for individuals to 13% and for businesses to around 9%, an increase of about 2% compared to the beginning of the year. Therefore, reducing lending interest rates as directed by the National Assembly in the coming time will face many difficulties and challenges due to developments in inflation, exchange rates and monetary tightening in the world.

Although interest rates have increased, there has not been much money deposited in banks recently. Illustration photo: Thu Huyen

It is known that the mobilization interest rate has increased but the amount of money deposited in banks in the past time has not been much. According to the State Bank of Vietnam, Nghe An branch, as of October 31, 2022, the total mobilized capital in the area is estimated at VND 190,659 billion, an increase of VND 15,193 billion compared to the beginning of the year, equal to 8.65%, higher than the same period in 2021 (7.4%). This increase in capital is quite low compared to the growth of outstanding credit.

According to the leader of the State Bank of Nghe An branch, the State Bank is continuing to organize solutions to carry out the tasks of socio-economic development of Nghe An province according to the Socio-economic Development Plan of the People's Committee of Nghe An province; continue to implement support loans for the rural agricultural sector, loans to encourage the development of high-tech agriculture, clean agriculture and credit programs under the direction of the Government and the Prime Minister; provide loans for major projects of the province; support debt collection for loans for aquaculture development according to Decree 67/2014/ND-CP...

The State Bank of Vietnam, Nghe An branch, also directed the provincial Social Policy Bank to continue effectively implementing preferential lending policies in the area, especially for lending to the Preferential Program using loan capital under Resolution 11/NQ-CP.

At the same time, the State Bank also continues to closely monitor domestic and international market developments to promptly and flexibly manage monetary policy solutions and tools, and be ready to intervene in the monetary and foreign exchange markets to meet the liquidity needs of credit institutions; thereby contributing to stabilizing the market and ensuring the safe operation of the banking system.