Banks on the Hunt for Depositors
Ms. Minh Loan, residing in Dinh Cong, Hanoi, was surprised to receive a call from a bank representative just before her 200 million VND savings account was due for maturity.
“The bank suggested I extend my savings term to 6 months, offering an interest rate of up to 5.4%/year. This is double the rate I received six months ago. Typically, banks don’t call for such small accounts, but as the year-end approaches, their representatives are very proactive in reaching out and advising,” Ms. Loan shared.
On social media, savings groups and bank employees are actively promoting attractive interest rates for deposits ranging from 100 million to billions of VND. Beyond competitive interest rates, many banks are offering year-end gifts like calendars and souvenirs to attract depositors.
Conversely, customers simply need to post their interest in finding the best deposit rates, and hundreds of bank representatives respond with offers of up to 8%/year, openly disclosing bank names and rates.
Specifically, VIB Bank offers up to 7.5%/year for 6-month deposits; KienlongBank 8.6%/year; VPBank 7.6%/year; GPBank 7.5%/year; PVCombank 8.1%/year; WikkiBank 7.7%/year; and NCB 7.9%/year.
Since early December, 18 banks have raised deposit rates, including Nam A Bank, MB, BVBank, Saigonbank, NCB, Cake by VPBank, Techcombank, Bac A Bank, ACB, Sacombank, SHB, KienlongBank, PGBank, OCB, VCBNeo, BIDV, VIB, and VPBank. Notably, NCB, VPBank, and Techcombank have adjusted rates twice.
High interest rates emerge in savings groups.
Many banks have adjusted rates for terms under 6 months to 4.75%, the ceiling set by the State Bank of Vietnam.
Dozens of banks have pushed rates above 6.5%/year, including Vikki Bank, Cake by VPBank, Nam A Bank, PGBank, Bac A Bank, and Viet A Bank.
Notably, Big4 banks like VietinBank and BIDV, known for stable rates, have joined the race to increase deposit rates.
Will Deposit Rates Continue to Rise?
A leader from a joint-stock commercial bank explained that the increase in deposit rates is driven by high credit demand in the final month of the year, fueled by growth expectations and new government policies. Banks face rising capital costs due to liquidity needs, while quality creditworthy businesses are scarce. This intensifies competition among banks, though they prioritize stable lending rates. Loan rates are unlikely to surge, and some banks may accept lower profit margins to retain quality customers.
In its Q4 banking sector outlook report issued on November 12, Vietcombank Securities (VCBS) predicts that deposit interest rates may continue to rise due to two key factors. First, system liquidity is under pressure as credit growth is expected to accelerate in the final quarter, with annual growth estimated at 18-20%. Second, USD/VND exchange rate risks persist during the peak import season, increasing foreign currency demand.
Based on these signals, VCBS believes some joint-stock banks may further raise deposit rates to meet capital needs and manage liquidity risks, despite efforts to keep overall rates low to support growth.
Deposit rates expected to rise through year-end.
Dr. Nguyen Tu Anh, Director of Policy Research at VinUni University, attributes the sharp rise in interest rates to two main causes: surging credit demand and reduced public deposits. High credit growth, particularly in real estate, reflects strong demand. Listed banks’ real estate loans grew 26% in the first nine months of 2024 compared to year-end 2023.
Regarding the link between bank asset quality and current interest rate trends, Dr. Tu Anh notes that bad debts are structural, making rate reductions difficult and driving upward pressure. As bad debts rise, banks must increase risk provisions, directly reducing profits, shrinking equity, and raising average capital costs. With higher input costs, banks have little room to lower lending rates and may even raise them to offset risks from poor-quality loans.
This highlights that addressing bad debts is crucial not only for banking system safety but also for lowering interest rates to support businesses and the economy.
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Amidst a steep market downturn, liquidity on HoSE has remained stagnant at a moderate level of approximately VND 22 trillion, attributed to systemic liquidity shortages and mounting pressure from rising interest rates.
Why Banks Are Rushing to Inject Capital
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At present, the expert observes that the market is exhibiting several more positive signals.
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Global gold prices surged to their highest level in nearly two months, following the Federal Reserve’s decision to cut benchmark interest rates by an additional 0.25%. Domestically, gold prices rose sharply, climbing between 900,000 and 1.1 million VND per tael compared to yesterday’s closing levels.
Notable Insights from the Growth Rate of Bank Deposits
Interest rates on deposits are rising across numerous banks, while concerns about a slowdown in capital inflows from the overnight market continue to grow. Financial reports from listed commercial banks reveal significant shifts in deposit growth, highlighting the existing pressures in capital mobilization and the increasing divergence among different banking groups in the current phase.
