Some commercial banks have revised down rates for short-term deposits, which is quite unexpected compared to forecasts of rate hike pressure for this year, according to Nguoi Lao Dong.
Source http://english.thesaigontimes.vn - Some commercial banks have revised down rates for short-term deposits, which is quite unexpected compared to forecasts of rate hike pressure for this year, according to Nguoi Lao Dong.
Techcombank announced the newest rates applicable from this month, with short-term deposit rates continuing to decline. The bank is now offering a rate of 4.8% per year on deposits of one to two months, 4.9% on three to five-month deposits and 6% on six to eight-month deposits.
Earlier this month, Techcombank twice revised down short-term borrowing rates, with the new rates dropping considerably in comparison to those in January. Deposits of nine to 11 months have seen rates falling by 0.3-0.5 percentage point to 6.2% per year.
Deposit rates at VPBank have similarly gone down. The bank adjusted short-term rates thrice last month with reductions of 0.2%-0.3 percentage point per year. The rates of one to two-month deposits and three to five-month deposits are now 4.8% and 4.9% per year respectively.
Similarly, short-term deposit rates have declined at other banks like SHB, VIB and MB.
VietinBank has brought down borrowing rates, with deposits of six to nine months reduced by 0.5 percentage point against the end of last year to 5.2-5.3% per year.
Nguoi Lao Dong newspaper quoted a banker in HCMC as saying that deposit rates have been revised down to cut capital costs after the Lunar New Year holiday. The mobilization amount, after some promotion programs having expired, is quite high compared to initial targets, whereas credit activities must adhere to the central bank’s instructions.
Another banker in HCMC said his bank has adjusted down the one-month rate due to abundant liquidity. Liquidity of short-term deposits is good, but banks always need to mobilize medium- and long-term capital. This helps explain why short-term deposit rates have declined but rates of longer terms at some banks have picked up to attract capital.
Specifically, the rate of 18- to 36-month deposits at Eximbank is now 8.2% per year. Sacombank has issued certificates of deposit in dong with a minimum value of VND1 million and a rate of 8.5% per year for seven-year certificates to attract long-term capital.
Financial expert Can Van Luc said that there are many reasons for banks’ mobilization rate cuts, including reducing the ratio of short-term capital used for medium- and long-term lending to 45% this year and 40% next year in accordance with Circular 19/2017/TT-NHNN of the central bank.
Data from the National Financial Supervisory Commission showcased capital mobilization in the first quarter inched up 3% against late last year and 2.6% against last year’s corresponding period. Meanwhile, credits last quarter were estimated to increase by 3.5% and 4.3% respectively.
In addition, the ratio of medium and long-term credits to total outstanding loans has risen to 53.2%, which is attributed to banks’ increased long-term mobilization rates.
According to Luc, deposit rates are unlikely to decline in the long run, especially due to this year’s rising inflation. In addition, as other investment channels such as gold, real estate and stock have been appealing to investors, mobilization rates need to be attractive enough to attract depositors.