Rising Interest Rates May Press Borrowings: SBV
Increasing deposit interest rates could put pressure on borrowings, the State Bank of Vietnam (SBV), or central bank, has warned local commercial banks.
The caution comes amidst a race in which many local commercial banks are hiking savings rates despite being awash in liquidity. As a result, deposits at state-owned banks had increased 34 per cent in the first half, the SBV reported.
Many banks have raised interest rates either in the US dollar deposits or in Vietnamese dong deposits or both, including the Industrial and Commercial Bank of Vietnam (Incombank), the Vietnam Commercial Bank for Private Enterprises (VPBank), the Vietnam Export and Import Bank (Eximbank) and the Asia Commercial Bank (ACB).
Since the beginning of this year, annual deposit interest rates have risen by 0.24 to 0.84 percentage points for local currency deposits, and 0.45 to 0.7 percentage points for dollar deposits.
Lending interest rates are keeping pace with deposit rates. The rate on overnight dong loans rose to 6.2-6.5 per cent from 6-6.3 per cent last month.
Many people are now cautious in borrowing from banks because of the high interest rates, which hover at 1-1.3 per cent per month, the SBV said.
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