HCM CITY — The number of interbank transactions that have taken place over the short term, such as overnight and one week, rose sharply after the State Bank of Viet Nam (SBV) cut its deposit interest rate by 1 per cent to 11 per cent per year.
According to the central bank's report on banking operations, announced on May 31, the total trading value in the interbank market through overnight-term transactions on May 28 reached VND16.201 trillion (US$778.14 million) from VND11trillion ($528.33 million) from previous days.
The interbank interest rate for these kinds of transactions fell to 4.09 per cent per annum from 4.8 per cent or 4.9 per cent per annum.
Meanwhile, turnover from one-week transactions was VND7.218 trillion, with the interest rate cut from 2.4 per cent or 3 per cent per annum to 1.92 per cent.
During the past week, the banks began to pay more attention to interbank loans with long terms, such as 12 months, even though they carried a high interest rate.
In particular, on May 28, when the deposit interest rate was cut to 11 per cent, the interest rate on interbank transactions with a term of 12 months still stood at 13.12 per cent. Even so, the banks borrowed VND792 billion.
In face of the central bank's continuous cuts in deposit interest rates, many people have deposited their savings at banks with long-term conditions, in hopes of enjoying high interest rates for a long time.
Nghiem Xuan Thanh, general director of Vietinbank, said that termed deposits in dong at his bank increased by 1.8 per cent per year compared with the figure late last year, and up by 41 per cent, as compared with the same period last year.
Long-term deposits at Vietcombank also were up by 30 per cent and will continue to rise in the near future, according to deputy general director Nguyen Van Tuan.
Eximbank and ACB were also facing a similar situation. A branch deputy director of ACB said that since mid-March, many people had transferred their short-term deposits, such as one week and two weeks, into long-term ones to keep their interest rate at high levels, in anticipation of the central bank's further cut of the deposit interest-rate cap.
Nguyen Van Dung, deputy director of the SBV's HCM City branch, also confirmed the trend, saying that the number of people's savings deposits at local banks was increasing as well as the number of long-term deposits. — VNS