Similar to the system of 35 domestic banks, interest rates on deposits of foreign banks in Vietnam are strongly differentiated, even varying by up to five percent per year for long terms.
In Vietnam, there are nine banks with 100 percent foreign capital (HSBC, Shinhan Bank, Woori Bank, Standard Chartered Bank, ANZ, UOB, Hong Leong, Public Bank and CIMB) and two foreign joint venture banks (Indovina Bank and VietnamRussia BankVRB). In particular, many banks mobilise deposits with competitive interest rates.
For example, a 100 percent foreign owned bank, Public Bank (Malaysia), offers the highest deposit interest rate of eight percent per year for 24-month and 36-month terms, much higher than about 10 domestic banks.
Indovina Bank also lists a relatively high level of 7.8 percent per year for deposits of 24 months, 36 months. Not to mention this bank implements a preferential programme for individual customers. Accordingly, for every 20 million dong of new deposits or renewals with a term of one month, customers will receive lucky scratch cards, prizes including cash from 20,000 dong to five million dong and gifts such as travel suitcases and bags.
VRB has the highest interest rate of 7.7 percent per year for 12 month terms while the six-month interest rate is 7.3 percent per year, higher than most of local banks.
While these banks have very competitive interest rates with domestic banks, others offer very low interest rates, much lower than that of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), Vietnam Bank for Agriculture and Rural Development (Agribank), and Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV).
The lowest is HSBC Vietnam, the interest rate for one-month term deposits is 0.5 percent per year, only equivalent to the interest rate of payment deposits of domestic private banks. The interest rates for three-month, six-month terms are 1.25 percent per year and 1.75 percent per year, respectively. The highest is 2.75 percent per year with a term of one year onwards.
Or at another Western bank, Standard Charted Bank, the highest interest rate is only 3.02 percent per year, for 36 months.
Observations show that interest rates at foreign banks and joint venture banks in Vietnam have been mostly unchanged or slightly increased since the beginning of the year until now. In addition, some banks have seen a strong increase such as Woori Bank, raising interest rates for 12-month term deposits from 4.5 percent to 5.3 percent per year, up to 0.8 percentage points.
In fact, for many years, most foreign banks had lower interest rates compared to domestic banks. Price competition does not seem to be a key strategy for them as not only low mobilising interest rates but also many types of service fees, especially for VIPs, are much higher than that of domestic banks.
Of course, each bank will have its own business strategy leading to different capital requirements. Some will continue to focus on inherent strengths such as international payments, foreign exchange trading and asset management but there are also banks that want to boost retail sales in Vietnam.
