90pct of bank deposits are of short term

Short-term deposit interest rates are now higher than the long-term rates, so customers have started to switch to choosing shorter maturities, VietBiz24.com reported on Thursday.
Call deposits often account for 25-30% of capital raised at banks, and the State Bank of Vietnam (SBV) also allows banks to use 25% of the total amount of call deposits for doing the business.

However, now more than 90% of the capital raised by commercial banks has maturities from one week to three months, plus the saving interest rate at 14%/year with one-day or one-week maturities, which will make short-term funding increase, causing an imbalance in terms of mobilization and lending by commercial banks.

In addition, many commercial banks reported that in recent days, a large amount of deposits had switched into the investment channel of gold. So, in addition to the measures to improve short-term interest rates to 14%/year to attract deposits, banks have started to suck the gold so that their total assets are not reduced too much as their dong deposits decline.

Asia Commercial Bank (ACB) has increased the interest rate of certificates of gold deposits in the period, with the highest level of 1.3%/year in 11-month period. HDBank increased its interest rate of certificates of gold deposits for 3-month period for economic entities to 1.2%/year.

However, many commercial banks said that raising gold is only a temporary solution because this means the cost of capital mobilisation of commercial banks increased to pay interest on gold in their warehouse, while commercial banks are currently not permitted to exchange gold in Vietnam dong for lending.

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial

Posted by VBN on Sep 23 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry