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Wednesday, June 26, 2024

Bank deposits surge as interest rates rise

The Saigon Times

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HCMC – Deposits at local banks have soared as interest rates have inched up.

Data from the State Bank of Vietnam (SBV) showed that in the first quarter alone, individuals’ deposits increased by nearly VND103.6 trillion, or over 11%, Tien Phong newspaper reported.

In the first half of the year, deposit interest rates for tenors of six-12 months rose by 0.5-1 percentage point on average over the end of last year.

Sai Gon Joint Stock Commercial Bank reported the highest deposit rate in the market, at 7.55% for online deposits of 18 months and longer.

At some smaller banks, such as Bac A Bank, BAOVIET Bank, Nam A Bank, CB Bank, PVcomBank, SHB, KienlongBank, the interest rate for savings of 12 months and longer is now over 7% each.

Can Van Luc, chief economist at the Bank for Investment and Development of Vietnam, said the deposit rate hike would help attract money from the public to lend to corporate clients. At present, banks’ liquidity is quite stable.

As of June 20, credit growth reached 8.51%. In the first six months of the year, many banks reached half of their credit growth caps for this year, so they have proposed adjusting up their caps.

Pham Chi Quang, deputy director of the Monetary Policy Department under the SBV, an increase in credit growth caps for lender banks would drive up inflationary pressure. The deposit rate spike has resulted in lending rates soaring.

According to SBV Deputy Governor Dao Minh Tu, global financial market volatility would certainly impact the Vietnamese economy. The recent rise in the prices of commodities would directly affect the central bank’s foreign exchange and monetary policies.

Statistics from the General Statistics Office showed that inflation stood at 2.44% in the first half of the year and inflationary pressure will build up in the rest of the year.

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