Liquidity remains strong: State Bank of VN

Liquidity of the banking system remains good and the interest rate level is stable with no pressure on rate hike reported.

Transactions at the ABBank’s branch in the northern Thai Binh Province. Up to 90 percent of deposits currently are short-term while demand for long and medium-term loans is growing rapidly. (Photo: VNA/VNS)

The State Bank of Vietnam (SBV) released the news on Monday in the wake of a recent deposit interest rate hike by some small-sized banks.

According to the SBV, while some banks have increased sharply long-term interest rates offered on certificates of deposit, some others have adjusted interest rate down by 10-30 percentage points per year.

Last week, VPBank announced it is offering a rate of 9.2 percent per year for five-year certificates of deposit.

VietA Bank and Sacombank have also listed a high rate of 8.2 percent per year for certificates of deposit.

However, during the week, VIB cut interest rate by 10-30 percentage points per year for all terms, making the rate for 1-2 month deposits stand at 5.1 percent per year, for 3-5 month deposits at 5.2 percent, for 6-11 month deposits at 5.6 percent and for deposits above 12 months at 7.1 percent.

The rate was also down by 20 percentage points for 18-36 month deposits at Maritime Bank and 10 percentage points at Ban Viet Bank and DongA Bank.

In the report released on Monday, SBV also said the adjustment of interest rate at some banks is normal to fit the banks’ business strategies, adding that some banks could increase interest rate temporarily at this time, but they could then adjust the rate lower next time.

Last week, some experts forecast that interest rate could rise after some banks issued certificates of deposit at high interest rates of up to 8.2-9.2 percent per year.

The rate was much higher than the average deposit interest rates offered by other commercial banks. Currently, State-owned commercial banks offer a rate of 6.5-6.8 percent per year for long-term deposits, while it is 7-7.5 percent at large-sized joint stock commercial banks and 8-8.2 percent at small-sized banks.

Experts said banks have been forced to hike interest rates on long-term deposits so that they have enough funds to provide long and medium-term loans.

According to statistics, 80-90 percent of deposits currently are short-term while demand for long and medium-term loans is growing rapidly.

In addition, SBV’s amendments to Circular 36/2014/TT-NHNN reducing the ratio of short-term deposits that can be used for medium and long-term loans from the current 60 percent to 40 percent have caused deposit interest rates to rise.

Experts, so far, still say keeping the interest rate stable would be hard work for the central bank this year, especially since it has to meet two other targets of controlling inflation to below 4 percent and providing support to attain economic growth at least 6.7 percent this year.

Source: VNS

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