MB Bank Securities identifies greater capital demand among enterprises as being behind recent VND deposit rate increases.
MB Bank Securities (MBS), in its Vietnam Outlook Report March 2016, said that commercial banks increased interest rates on VND deposits due to demand among enterprises for investment capital in February and March.
It also attributed the rate rises to the banks’ need to be competitive in the context of a stable credit situation and to be ready for the implementation of the amended Circular No. 36, which provides for increases in medium- and long-term capital.
According to the State Bank of Vietnam (SBV), deposit interest rates on the interbank market fluctuated from 4.43 to 5.39 per cent per annum for terms from one to six months, 5.4 to 6.5 per cent per annum for terms from six to 12 months, and 6.4 to 7.2 per cent per annum for terms of more than 12 months.
Deposit interest rates offered by some commercial banks reached and even surpassed the ceiling announced by the SBV, the MBS report stated. In particular, OCB, NCB, OceanBank, and Sacombank are offering 5.5 per cent per annum on five-month term deposits while other banks are offering from 7 to 7.5 per cent per annum for terms of six to 12 months and from 7.5 to 8 per cent per annum for terms of over 12 months.
Demand among commercial banks for more capital will continue to rise, MBS predicted, putting pressure on deposit rates increasing even further.