Interest rates on deposits above 12 months are currently one percentage higher than the deposits for other terms. — VNA/VNS Photo

HA NOI (Biz Hub) — Some mid-sized commercial joint stock banks recently raised interest rates on short-term dong deposits amid rising credit demands.

HDBank has increased its rates by 0.3 percentage to 5 per cent per year on one-month deposits, 5.7 per cent on terms between six and 11 months, and 6.5 per cent on deposits above 12 months.

DongA Bank pushed its interest rates by 0.1-0.3 percentage, while deposit rates at Eximbank were revised by 0.2-0.4 percentage.

The rise came a few weeks after some large lenders such as Agribank and ACB announced increases in their interest rates on long-term dong deposits to improve liquidity amid the pressure of a stronger US dollar.

Interest rates on deposits above 12 months are currently one percentage higher than the deposits for other terms.

Attempting to lure depositors, private commercial joint stock banks are currently offering interest rates of roughly 0.8 per cent higher than that by State-owned commercial joint stock banks.

According to Tuoi tre (Youth) newspaper, Truong Van Phuoc, vice chairman of the National Financial Supervision Commission (NFSC), noted that banks had raised interest rates to improve liquidity and it was a normal practice and not a basis for them to hike lending rates accordingly.

Financial expert Nguyen Tri Hieu observed that although inflation remained stable, with CPI in May rising 0.16 per cent over the previous month and up 0.95 per cent year-on-year, a stronger US dollar recently affected capital mobilisation as some people withdrew their dong savings to buy the dollar; hence, banks had to raise dong deposit rates to attract capital.

The NFSC last month said that deposit rates were under pressure and set to rise as the growth rate of deposits had been lower than that of credit.

The total deposits rose 0.98 per cent in the first quarter, while the total outstanding loans increased 1.7 per cent, in which outstanding loans in dong climbed 2.4 per cent and outstanding loans in foreign currencies dropped 0.9 per cent, NFSC said.

As a result, the loan-to-deposit ratio rose to 84 per cent from 83 per cent in December 2014, of which LDR in foreign currencies climbed to 87 per cent from 83.4 per cent at the end of 2014, the NFSC reported.

Experts said that the deposit interest rate rise was a positive signal as it showed that capital demands were recovering.

According to statistics from the State Bank of Viet Nam, credit growth in the first five months this year rose 4.8 per cent, much higher than the 2.3 per cent hike in the same period last year. — VNS