Local banks are raising deposit interest rates for terms of 12-months and more after the state bank removed the ceiling for these terms.
Western Bank is offering annual deposit interest rates of 14% for a 13-month term. This is up from 13.5%, which was the highest to be found among banks.
The Southeast Asia Commercial Joint Stock Bank (SeABank) has made changes to its deposit interest rates, of which the highest is 12% per year for a 24-month term. For deposits over VND 1 billion interest rates range from 12.6% to 12.8% per year.
ACB, Eximbank and SCB are also raising annual deposit interest rates to as high as 12% for long term deposit accounts.According to their latest report, VietBank will apply a deposit interest rate of between 11.5% and 12% percent per year for terms of between 13 and 36 months beginning June 15.
The race among banks to raise deposit interest rates came in the wake of the State bank’s decision to remove the cap for deposit accounts with terms of 12-months or more. This decision aimed at helping credit institutions to increase medium to long-term loans.
The decision has given a chance for local banks to freely raise their rates in order to attract customers. It is predicted that this competition among banks will increase.
To prevent unhealthy competition, the State bank has said that it will continue to apply caps for certain terms and sectors.
However the bank also confirmed that the situation was not cause for worry. “We now have adequate bank liquidity and we expect lower inflation. The weaker banks are also now under tighter control," they stated.
The heads of some banks have said that the State bank is on the right track with their decision, explaining that in the past deposit interest rates for short term accounts were equivalent to those of medium to long-term and sometimes even higher. This, they said, was creating difficulties for banks in the mobilisation of of capital in the medium and long-term.