Banks are engaged a new price war, according to Nguyen Thi Kim Thanh, deputy chief of the central bank’s Monetary Policy Department, as rates steadily rise.
In the capital, 12-month term deposit rates are now around 9.36% for dong account and 5.3% for US-dollar accounts, according to the State Bank of Viet Nam.
The trend began as early as October of last year when Viet Nam Technological and Commercial Joint Stock Bank (Techcombank) increased annual deposit rates by 0.12-0.24%, depending on the account’s denomination.
Several weeks later, Southeast Asia Bank (SeaBank) followed with their own 0.01-0.03% hike on monthly rates.
Experts attributed the price war mainly to harsh competition in the market for new customers.
Nguyen Hoai Anh, general director of An Binh Commercial Bank (ACB), says that newly-established banks must raise interest rates to attract new customers away from the more popular big banks. For their part, larger financial institutes have responded with their own rate hikes and special offers.
There is a fear in the industry that once a customer begins using a bank’s services it will be very difficult and costly to lure them away.
The nation’s booming stock market has also contributed to the price war. Returns on stock investments are, currently, much higher than on bank accounts. As a result, money is pouring into the securities market, limiting the available capital for savings.
In addition to rate hikes, banks also launched new promotional campaigns.
The Bank for Investment and Development of Viet Nam (BIDV) offered customers 10 billion VND (625,000 US$) in prizes, while the Military Bank (MB) spent 1 billion VND (62,500 US$) on tours to Europe. Sai Gon Joint Stock Commercial Bank (SACOMBANK) even offered people gold.
Source: VNS
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