Gap widens in deposit interest rates

Small- and medium-sized banks have hiked their interest rates.

The Saigon Commercial Bank has increased its rates for six-month deposits to 7.65% for customers aged under 40 and 7.7% for older ones.

The Viet Capital Bank, GPBank, Bac A Bank, NCB, and DongA Bank have raised their six- month rate to 7% or above.

But at large State-owned banks like BIDV, VietinBank and Vietcombank, they remain at 5.1-5.3%.

Mid-sized lenders offer 6.8%.

The difference in rates between small and large lenders is 2-2.6 points for six-month deposits.

Analysts have attributed this to differences in liquidity, cash demand and health of banks.

According to the National Financial Supervisory Committee (NFSC), liquidity is abundant at strong banks.

“Some small credit institutions and those restructuring are facing difficulties in getting low-interest capital on the inter-bank market, and thus have to maintain or raise their deposit interest rates.”

Nghiem Xuan Thanh, Chairman of Vietcombank (VCB), said his bank, which has the lowest interest rates in the industry, said: “Last year, the bank’s rate was among the lowest but had the highest deposit growth rate due to its prestige and branding. The low deposit interest rate has helped keep loan interest rates low compared to other credit institutions.”

Analysts warned depositors to be careful and select a trustworthy bank to deposit their money since the National Assembly has passed a law for declaring troubled banks bankrupt through an amendment to a law on the operation of credit organisations, which takes effect this year.

As a result, large, State-owned banks find it easy to get deposits while smaller ones are struggling.

But the analysts also admitted that the possibility of bankruptcy is extremely low in the next few years.

Truong Thanh Duc, Chairman of Basico Law Company, said the State Bank of Vietnam (SBV) should publicise information about the operations of banks for the benefit of depositors.

It is important to control credit growth to reasonable levels and focus on priority areas, he said.

In 2017, many lenders achieved large profits due to strong credit growth. This year, the State Bank of Vietnam has set a credit growth target of 17%, but many banks expect that to be hiked after the first half of the year.

At a recent conference, SBV’s Deputy Governor Dao Minh Tu said the central bank had warned 15 lenders for increasing credit to non-priority sectors.

Nguyen Duc Thanh, chief of the Vietnam Institute for Economic and Policy Research, said credit had reached 135% of the country’s GDP, or close to levels that could pose a risk to the banking system.