Banks increase dong interest rate to lure depositors

VP Bank on Wednesday offered higher interest rates to lure depositors.-Photo VNA/VNS Photo

VP Bank, on December 21, announced new rates, raising rates for 1 month deposits by 0.3 per cent per year to 5.2 per cent, and increasing by 0.4 per cent to 6.9 per cent per year for 12 and 13 month deposits.

Previously, Eximbank also increased its short-term deposit rates by 0.1-0.2 per cent per year for 1 month, 3 month and 6 month deposits to 4.6 per cent, 5 per cent and 5.6 per cent per year, respectively.

PVcomBank also offered depositors higher rates of 5.5 per cent for 3 month terms and 6.5 per cent for 6 month terms, up 0.2 per cent and 0.4 per cent, respectively. The bank’s highest rate of 7.7 per cent per year is applied to deposits of 24-60 months.

Besides interest rates, some banks also continuously introduce attractive promotional programmes to attract depositors.

According to a leader of a Ha Noi-based bank, demand for capital is rising prior to Tet (Lunar New Year), so banks have to try to attract deposits to balance their capital sources.

Banks expand networks

Along with promotion programmes, banks have been expanding their networks in an aim to reach their annual targets.

In recent months, more bank transaction offices and branches have opened to welcome both individuals and enterprises as customers.

For instance, the An Binh Commercial Joint-Stock Bank has opened 11 branches and transaction offices in Da Nang and the provinces of Lang Son, Nghe An, Binh Duong and Gia Lai.

Bac A Bank, by the end of last quarter, had expanded to include 100 transaction offices in 20 province and cities. TP Bank also plans to open more offices in provinces and cities nationwide.

A leader from An Binh was quoted as saying in Nguoi Lao Dong (The Labourer) newspaper that expansion was one of the most important steps in becoming a leading bank in the retail market.

An expert told the newspaper that estimated growth of the national credit market this year would be 17-18 per cent against last year, if growth increases by 3 per cent per month in the last few months.

He said this was a good time for banks to expand and introduce promotions to reach their year-end targets. As the banking system is too small to fully meet demand, expansion would improve service quality at banks, he added.

The representative from An Binh Bank said there was strong demand for bank expansion, as this is a traditional channel to approach customers in all regions of the country. Morever, demand for lending at the end of a year is very high, prompting banks to expand to serve more customers.

However, with the opening of more branches and transaction offices, risks can increase as customers worry that service quality and technology will be inadequate. Human resources and management skills may not be ensured as well.

Experts, however, said there was no need for concern as regulations on controlling expansion in the banking sector, in which banks must show profits and have no more than a 3 per cent bad-debt ratio, would lower the risks. Bank expansion will help improve quality and competitiveness as well as increase each bank’s market share, according to experts.