Notably, banks have already raised annual deposit interest rates to 9.9 per cent, which has reduced their profit margin. However, deposit growth is reportedly low and slow.

Earlier, the State Bank of Viet Nam stated that if deposit interest rates passed 10 per cent it would intervene.

Lien Viet Bank has issued nominal certificates of deposit (CDs) at 10.20 per cent interest for 24 months for dong and 3.14 per cent for nine months for US dollars.

The minimum face value for Vietnamese dong is VND100,000 (US$5.55), while for dollar it is 100. Furthermore, the bank is offering flexible terms that permit customers to withdraw their money before the agreement has matured. They are also permitted to transfer or use collateral to borrow money.

The Bank for Investment and Development of Viet Nam has also issued CDs in Vietnamese dong with a minimum face value of VND1 million for individuals and VND50 million for corporations for 4-13 months, with interest rates ranging from 9.3-10 per cent per year.

Besides offering flexible deposits and interest policies, VietABank is attempting to attract depositors with promotions such as three kilos of SJC gold, refrigerators, motorbikes, laptops, cell phones and cameras. At VIB, individual customers who have deposited money for more than one month are given free accident insurance with Bao Viet Insurance. With deposits of VND500 million or more, customers will receive pre-paid health care services at L’Hospital Francais de Ha Noi.

Vietinbank is offering VND1 billion and numerous gifts for customers buying CDs.

Techcombank, Sacombank and ACB are also offering promotions for direct capital.

Alexander Nguyen, deputy general director of Lien Viet Bank, said: "Banks are issuing CDs to mobilise more capital, keep customers and support enterprises."

Nguyen Hoa Binh, chairman of Vietcombank, said: "Capital demand often strongly increases in the latter part of the year, so banks have to use many channels to absorb deposits. Moreover, banks also have to offer promotions to attract depositors."

If the prime rate remains at 7 per cent, lending capital will being kept at 10.5 per cent per year.

That means banks will not have room to increase interest rates to attract deposits because their profit margins will be cut.

Source: Vietnam News