Several banks have increased savings and lending rates since the beginning of November.
VIB was the latest lender to raise deposit rates this month, following an adjustment at the end of October. The bank lifted rates by 0.2 per cent per year for one to two month terms and six to 36 month terms, while the three to five month terms rose by 0.75 per cent per year.
TPBank also increased its one, six and nine month deposit rates by 0.2 per cent per year, and raised the three month rate by 0.1 per cent per year.
Bac A Bank currently offers the highest rates in the market for deposits of up to VND 1 billion, with 12 to 13 month terms at 6.4 per cent.
Some banks pay more than 6 per cent for 12 month deposits, including Vikki and MBV, while others exceed 6 per cent for 13 month terms, such as HDBank and OCB.
A total of 18 banks have officially raised deposit rates in November, including Sacombank, VPBank, MB, HDBank, GPBank, BVBank, Techcombank, BaoViet Bank, PVCombank, LPBank, KienlongBank, MBV, Bac A Bank, Vikki Bank, Nam A Bank, NCB, VIB and TPBank.
Rising deposit rates have pushed lending rates up by one to two per cent compared with last month. ACB increased its preferential two year loan rate from 6 to 8 per cent per year. VPBank’s floating rate also climbed from 12 to 14 per cent per year.
OCB recently announced an adjustment to its credit card interest rates, lifting the maximum to 37 per cent per year from the previous 33 per cent. The new rates apply from November 20 for all credit cards except OCB Mastercard World 2in1 and OCB Mastercard Priority.
Many other banks have increased credit card rates by three to four per cent per year. Vietcombank, BIDV and VietinBank have introduced new November rates with maximum levels of up to 22 per cent per year.
Banks are adjusting credit card rates as year end consumer demand rises sharply.
Why are rates rising?
In a newly released report, Vietcombank Securities (VCBS) forecast that deposit rates may rise again at some joint stock banks towards the end of the year to meet capital needs and manage systemic risks, although they will remain relatively low to support growth.
Economist Nguyen Tri Hieu said the banking sector’s credit growth this year is high, potentially reaching 18 to 20 per cent according to the State Bank’s projection. Banks therefore need to raise deposits to expand lending. When they require additional capital, banks typically lift deposit rates to attract savers.
Some banks are also facing asset quality issues. When part of their lending portfolio turns into bad debt and repayment slows, they are forced to raise new funds to meet existing obligations.
"Banks are targeting strong credit growth this year as loan demand often increases towards the end of the year, especially during preparations for the festive season. This means banks continue to boost deposit mobilisation and the general trend is that deposit rates will keep rising. If deposit rates increase, lending rates are likely to follow," Hieu said.