Other banks have followed suit after the Asia Commercial Joint Stock Bank (ACB) increased their saving rate to 13% per year on September 11 for 12 and 13 month terms.
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| Long-term deposit interest rate increases to 13% |
This is the highest rate since the 14% rate Western Bank introduced in June.
The Vietnam Export Import Bank (Eximbank) and Saigon Thuong Tin Bank (Sacombank) quickly adjusted their ceiling rates to 12.8%-13% per annum. Bac A Bank, Dai A Bank, Viet Thuong Tin Bank (VietBank) also followed and adjusted their saving rates up to 12.9-13% per year.
The 13% rate will be applied to 12 and 13 month term deposits, which don't have restricted interest rate caps. The longer term deposit still have 12% per year interest rate and 9% per year interest for shorter periods.
ACB Deputy Director Nguyen Thanh Toai denied rumours that the bank was suffering liquidity issues. Toai said this wasn’t an issue and that the banking sector had attracted larger deposits from customers.
He further said the bank wanted to encourage customers to invest money into making long-term deposit, since most of the bank’s loans were for long-term periods.
However, according to the State Bank of Vietnam, as of September 7, credit growth of the whole banking system only reached 1.82% while the savings rate is ten times higher. This means that the banks are still very cautious in giving out loans.
Economist Nguyen Dai Lai said the figures indicated that capital was still being used to repay loans and not for any useful purposes.
"The SBV should remove the cap on interest rates. Administrative tools should be applied to short-term lending rates." he said. "The SBV could also limit interest rates. The lending rates can’t be 125-130% higher than the interest rate of the most recent government bonds for one, two and three year periods."
He said through this, lending interest rates might not exceed the expected inflation rate and the interest rates for short-term deposits must lower than the long-term deposits.
