After increasing steadily in recent times, deposit interest rates at most banks in Vietnam are standing at rather high levels, including 8.5 per cent for 12-month terms at ABBank, Viet Capital Bank and VietABank.

Some others such as OCB, BacA Bank, NCB, Bao Viet Bank, and Nam A Bank are offering around eight per cent.

Only a few banks have kept their rates moderate – MB is offering 7.5 per cent for 12-month deposits and BIDV is offering seven per cent.

Some credit institutions are selling certificates of deposits to individual customers with coupons rates of over 10 per cent.

Viet CapitalBank is offering 10.2 per cent for 60 months.

Analysts said most banks increased interest rates on long-term deposits to implement the central bank’s roadmap for reducing the use of short-term deposits for medium- and long-term loans.

The State Bank of Vietnam (SBV) required banks to reduce the use of short-term deposits for medium and long-term funds to 40 per cent this year from 45 per cent last year.

National Centre for Information and Forecast deputy director Dang Duc Anh said banks had to increase deposit mobilisation since the central bank had tightened money supply while demand for loans remained very high.

It is self-evident that any increase in deposit interest rates will have an impact on lending interest rates, but this time experts are divided on this.

Some said there was a possibility that banks would continue to hike deposit interest rates for the rest of this year, and it would result in higher credit interest rates.

But many others strongly believed there would be no such impact.

Banking expert Can Van Luc said the increasing deposit interest rates do not reflect the banking sector’s liquidity as seen by the fact that many major banks have kept their deposit interest rates steady.

MB still offers only 7.5 per cent for 12-month deposits while VietinBank and BIDV are keeping it at seven per cent.

The inter-bank interest rates have been steady and even shown signs of falling.

Tran Du Lich, a member of the Prime Minister’s Economic Advisory Group, said it was clear from this that lending interest rates would remain unchanged from now until year-end.

Other experts said lending interest rates relied on many factors including foreign exchange and inflation rates, and these had remained stable since the beginning of the year.

The central bank would strive to ensure deposit interest rates do not increase any further, they said.

SBV deputy governor Dao Minh Tu said the central bank’s recent decision to reduce key interest rates by 0.25 percentage points was also aimed at enabling banks to cut lending interest rates, especially on loans to businesses in priority sectors.

It was likely to make another 0.25 percentage point cut at the end of this year or early next year, he revealed.

VIET NAM NEWS/ASIA NEWS NETWORK