Vietnamese banks are engaged a new race boosting deposit interest rates, Nguyen Thi Kim Thanh, deputy chief of the central bank’s Monetary Policy Department said, as rates steadily rise.
In Hanoi, 12-month term deposit rates are now around 9.36 per cent for Vietnamese dong deposits and 5.3 per cent for US dollar deposits, said the State Bank of Vietnam.
The upward tendency warmed up in early October last year when Vietnam Technological and Commercial Bank (Tecombank) increased annual deposit rates by 0.12-0.24 per cent, based on different deposit amounts.
Several weeks later, the Southeast Asia Bank (SeABank) followed suit with their own 0.01-0.03 per cent hike on monthly rates.
Experts attributed the price war mainly to tough competition in the market for new customers.
Nguyen Hoai Anh, general director of An Bink Commercial Bank, says newly-established banks must raise interest rates to attract new customers away from more popular big rivals. Meanwhile, larger financial institutions have responded with their own rate hikes and special offers.
The nation’s booming stock market has also been considered as one of prime reasons for the price war. Returns on stock investments are, currently, much higher than on bank accounts. As a result, money is being poured into the securities market, limiting the available capital for savings.
In addition to rate hikes, banks have also launched new promotional campaigns.
The Bank for Investment and Development of Vietnam (BIDV) offered customers VND10 billion in prizes, while the Military Bank spent VND1 billion on tours to Europe. The Saigon Joint Stock Commercial Bank even offered people gold.
Reportedly, Hanoi-based credit organizations posted total deposits of nearly VND231.78 trillion ($14.5 billion) by the end of 2006, rising by over 32 per cent against a year earlier to reach the highest level for the last five years. (VNS, Vietnam Panorama)
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