Hanoi (VNS/VNA) - Many commercial banks raised deposit interestrates in recent months, triggering worries about the increasing pressure on thelending rates.

But some insist this was only a short-term measure.

From the beginning of December, rates for deposits of less than six month termswere mostly increased to the ceiling of 5.5 percent and 5.7-7.6 percent fordeposits of six to 12 month terms.

For long-term deposits, rates were raised from 6.5-8 percent per year popularin the first months of this year to currently 8.5-8.7 percent.

National Citizen Bank, Viet Capital Bank, Bac A Bank, VPBank, PVComBank, VietABank, Sai Gon Commercial Bank and Orient Commercial Bank were among those offering7 percent interest rate for deposits of six-month term.

At VPBank, depositors would be provided rates of up to 7.7 percent per year fordeposits from six to 12 month terms. For deposits of 12-24 month terms, VietCapital Bank offered a rate of 8.6 percent per year and 8.4-8.5 percent at TPBank, VIB and PVComBank but with a requirement about the deposit sum.

Besides raising deposit rates, banks also provided promotions to attractdepositors.

This raised a question whether the trend of increasing deposit interest rateswould continue and weigh on lending rates.

According to Truong Huy Mai, a financial analyst from RMIT, the borrowingdemand of the economy is often high in the end months of the year, resulting inthat banks must raise rates to attract more deposits. However, it is differentthis year because of the State Bank of Vietnam’s policy not increasing creditgrowth targets for commercial banks although some hit their credit growthtargets in just first nine months of this year.

Mai added that from the beginning of this year, banks were required to increasethe percentage of medium and long-term capital sources, therefore banks tendedto raise interest rate for long-term loans to attract capitals. However,raising interest rates was only short-term pressure and deposit rates wouldsoon be stable, Mai said.

A representative of the State Bank of Vietnam was quoted by Nguoi Lao Dong (Labourer)newspaper that banks raised deposit rates to attract idle money from citizens,not because of that banks were facing with liquidity shortage. What’s importantto the market was that lending rates remained stable, he said, adding that thecentral bank would keep a close watch on the recent developments of depositrates and that which banks increased lending rates unreasonably or providedloans excessively in sectors not prioritised such as property and securitieswould be “whistled”. 

Governor of the State Bank of Vietnam Le Minh Hung recently said interest rateswere kept at low levels this year, which together with the stability of thefinancial market helped remove difficulties for businesses, especially theprivate sector.

Besides, the restructuring of the banking sector and bad debt handling alsoposted positive results, Hung said, adding that bad debts were reducedsignificantly and was now at 2,16 percent of the total outstanding loans. Hesaid this helped consolidate confidence of depositors.

At the Government’s meeting in November, the Government asked the State Bank of Vietnam to closely watch the development of foreign exchange rates andinterest rates as well as be flexible in monetary policies to ensure liquidityof credit institutions to stabilise the monetary and forex market and meet thecredit demand of the economy. — VNS/VNA