Large banks have followed smaller banks in raising short and medium-term rates in the first two months of this year.
Large banks increase deposit rates
Vietcombank increased two-month interest rates by 0.2% to 4.8% per year. The three-month and six-month terms now have 5% and 5.4% rates respectively. Meanwhile, 12-month interest rates increased from 6% to 6.5%.
BIDV's interest rates for one and three-month terms were 4.8% and 5.2%, 0.3% and 0.4% lower than other smaller banks. It increased the rates by 0.3% since March 19. The rate for two year term deposit now stands at 7%.
As major banks including Vietinbank and BIDV started increasing their deposit rates, the banking sector's liquidity may improve.
According to the Vietcombank Securities Company, an increase in deposit rates is inevitable as the Vietnam dong is under several pressures such as rising inflation. In addition, last year’s deposit growth rate was 13.59%, lower than credit growth rate of 17.3%, leading to a high loan-to-deposit ratio at several banks.
The SBV’s amendments to Circular 36 also reduced the ratio of short-term deposits, that can be used for medium and long-term loans from 60% to 40%, which has caused deposit interest rates to rise. As the State Bank’s cap of 5.5% for less than six-month terms has been maintained, the rates for short-term deposits are now ranging from 4% to 5.5%. Interest rates for more than 12-month terms are mostly from 6% to 8%.
According to the Vietcombank Securities Company, interest rates may be kept low and stable especially when economic growth slows. It is forecasted that interest rates this year will have see a marginal increase of 0.5%.
