Negotiated lending rate should be brought to 12pct/year: specialist says

Banks have raised savings rates slightly and enhanced promotion programmes to attract more idle capital instead of lowering the deposit rates and limiting promotions.

On May 18, Eximbank continued lifting the deposit rate of the dong in terms of 3-6 months although no long earlier, the bank had adjusted up saving rates of the dong. Hence, Eximbank’s deposits carry the highest rate of 11.65 percent pa on the 12-month term. But for the short terms of 3-6 months, the deposit rates were increased to 11.55-11.58 percent pa, higher than the old benchmark. Customers depositing money at banks in terms of 1-2 months can enjoy an attractive interest rate of between 11.25 and 11.35 percent a year.

Similarly, on May 13, ACB for “Floating saving rate” applied an interest rate for the product with the term of 36 months and the highest rate of 11.6 percent for 12-month deposits.

From May 20 to June 30, Saigon Commercial Bank (SCB) released the prize based programme “Gui tien ngay-co may trung lon” for all customers who open new normal deposit accounts with the terms of 1-13 months in dong or US dollar. Accordingly, apart from preferences embedded with products, customers also can join the lucky draw programme with total prize value of up to 1.4 billion dong from SCB.

On May 17, Ocean Bank also launched a campaign to raise instalment savings “An tam tich luy-Vung buoc tuong lai”. The instalment savings is a scheme where a depositor agrees to pay a stated sum each month for a period. Interest accrues on a yearly basis after the completion of the savings cycle. In the term of saving book, depositor will have chance to join the life insurance product of Previor Vietnam with the insurance value of up to 800 million dong.

Small to medium sized banks said that if they do not increase promotions, it will be very difficult to attract capital from residents. Especially, most customers want to “bargain” to receive the best possible deposit rates despite the current savings reached positive real interest rates compared with inflation of first four months of 2010.

Larger banks said that no promotion means that banks will not be able to keep the saving source while more and smaller banks offered higher interest rates as well as more preferences for depositors. Vietcombank’s general director Nguyen Phuoc Thanh said that the spare capital source factually is in surplus but banks find it hard to cut down deposit rates further against the expectation of customers. Thus, foremost the lowest lending rate of Vietnam also could be pulled down to 13 percent pa only.

The deposit rate of around 11.5 percent pa threshold can be considered to be at a high level in the current context when Jan-April inflation was controlled at low level and targeted at below two digits (10 percent) within 2010, Duong Thu Huong, general Secretary of Vietnam Banks Association (VNBA) said.

So, banks should adjust down the negotiated lending rates and step by step lower the deposit rates. However, at a meeting with member banks in Hanoi last month, many lenders expected to cut down deposit rates through limiting promotions and raising more cash and interest rates. But other members in HCM City did not have any idea about this.

General director of Sacombank, Tran Xuan Huy gave his view that compared to the dong; the enterprises prefer taking US dollar loans because of more attractive loan rates. But, from now to the year end, the dong lending rate will be tending to decrease because the disbursement of capital in dong will surge strongly.
Sacombank is applying the negotiated loan rate at the lowest rate of 13 percent pa for VIP customers and others using its many services.

He added that the interest rate of the dong could be decelerating in the future. But at the moment, banks should help enterprises avoid the pressure on capital. Bankers said, basically they will continue reducing slightly both deposit and loan rates in this June.

Prof Dr Tran Hoang Ngan, deputy master of HCM City Economic University cum member of National Finance and Monetary Advisory Council, Vietnam’s credit growth of 6 percent in first four months of 2010 is remarkable and the growth is expected to be higher in the rest two quarters thanks to the increasing capital demand. To improve credit activities, the negotiated lending rate needs to be brought to the more suitable level at 12 percent pa.

Dau tu chung khoan

Tags: vietnam bank, Vietnam finance, Vietnam financial, Vietnam lending rates

Posted by VBN on May 21 2010. 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