Depositors flock to enjoy higher interest rates

Tuesday, May 20, 2008
Banks on May 19 rushed to lift deposit interest rates to around 14% per year in an attempt to attract more clients. At the same time, depositors kept banks tellers busy as they took advantage of the offer.

Two sound joint stock banks listed on the local stock market had already moved up their deposit rates.

Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) gave an interest rate of 14% yearly for terms of more than six months and 13.5-13.8% for those less than six months.

Asia Commercial Joint Stock Bank (ACB) lured in clients by offering 13.68% for 13 month terms, 13.56% for 12 month terms and 13.44% for nine month deposits.

Many other banks have also raised interest rates for all deposit terms, but seem to have focused on short and mid term deposits.

Hanoi Building Commercial Joint Stock Bank (Habubank) introduced rates of 15% per annum for 1-24 month deposit terms and 12-14.4% for one to three weeks.

Vietnam Commercial Joint Stock Bank for Private Enterprises (VP Bank) has given 15% for over six month terms.

Export and Import Commercial Joint Bank (Eximbank) offered 14.196% rates for 7-13 month terms and 14.004% for those from one to six month terms.

DongA Commercial Joint Stock Bank offered 13.8% per annum for 1-6 month terms and 14% per year for 7-12 month terms.

Saigon Commercial Joint Stock Bank (SCB) presented an annual interest rate of 13.8% for deposits of over nine months.

Bank assumed that over the next few days all banks would present new rates, in which minimum deposit rates would be about 13% per year, maxing out at around 15%. However, Nguyen Thanh Toai, deputy general director of ACB Bank, told Vietnam News, “I think the deposit rates won’t exceed 15%.”

Costs to mobilise capital [including money for compulsory reserves, compulsory notes, liquidity and other costs] were often 2-2.5% of the deposit rates, he explained.

The busy trading at commercial banks on May 19 was the result of the interest rates lifting from the central bank on May 17.

From these lifted rates, deposit rates were moved up to 18% per year instead of the 12% ceiling cap. The new rates came into effect on May 19. (VNA)