Commercial Banks rush to lift interest rates

Thursday, May 22, 2008
Commercial banks pushed up deposit interest rates on May 21, to above 15% per annum just two days after the State Bank of Viet Nam announced new interest rate regulations based on the newly imposed 12% basic interest rate.

Saigon-Hanoi Commercial Joint Stock Bank (SHB) said as from of May 21, its depositors will enjoy a 14.5% interest rate for 1-2 month terms, 15% for the 4-13 month terms and 13.5% for 24-36 month terms.

Southeast Asian Commercial Joint Stock Bank (SeABank) meanwhile raised their annual deposit interest rate for a 14 month term to 15.6%, the highest deposit rate so far among commercial banks.

Six to nine month terms at the bank now have an interest rate of 15.36% and under six month deposits will get 15%.

Two days before, An Binh Bank (ABBank) offered a peak annual interest rate of 14.4% for deposits of more than 13 months, while Dai Duong Commercial Joint Stock Bank (OceanBank) increased its annual interest rate for 12-13 month deposits to the maximum 15%.

Oriental Commercial Bank (OCB), Viet Nam Commercial Bank for Private Enterprises (VP Bank) and Nam Viet Commercial Joint Stock Bank (Navibank) have also lifted their deposit interest rates to the 15% limit.

Banking analysts predicted the common deposit interest rate will range between 13.5-15%, depending on short or long term strategies of local banks. They said a new wave of interest rate increases was possible, but a prolonged race like earlier this year was unlikely.

According to the central bank’s regulations, deposit interest rates offered by local commercial banks are not permitted to exceed 150% of the basic interest rate.