A few days after the Tet Holiday, numerous commercial banks silently raised interest rates due to liquidity-related issues, the whopping demand for capital, and the great competition among Vietnam-based commercial banks.

The great gap between before- and after-Tet Holiday interest rates was due to commercial banks' liquidity matters, demand for capital mobilasition and financial performance.

Specifically, the majority of small-scale commercial banks, including Capital Bank, GPBank, BacA Bank, NCB, and DongA Bank, that are currently restructuring reported unusually high deposit interest rates at 7 per cent per year for the term of six months, whereas the same type of interest at large-scale commercial banks like BIDV, VietinBank, VCB, and Agribank are around 5.1-5.3 per cent. In contrast, medium-scale commercial banks offer six-month deposit interest rates of 6.8 per cent.

According to a number of market analysts, the 2-2.6 per cent difference in the interest rate offered by leading, small-scale, and restructured commercial banks for the term of six months was triggered by the liquidity ratio, the level of the demand for capital, and the financial performance of each commercial bank.

numerous market analysts also pointed out that the main reason behind small-scale commercial banks’ scheme of raising interest rates was to prepare for surging credit growth in 2018, as previously forecast.

Numerous market analysts also pointed out that the main reason behind small-scale commercial banks’ scheme of raising interest rates was to prepare for surging credit growth in 2018, as previously forecast.

As concluded by the National Financial Supervision Commission (NFSC), the liquidity of the overall financial system was “healthy,” yet only a modest number of commercial banks, especially large-scale commercial banks, could reach this threshold. Additionally, small-scale commercial banks keep struggling with appealing the low-interest-rate stream of capital, thereby they were pressed to at least maintain the current or keep raising the deposit interest rate.

Furthermore, numerous market analysts also pointed out that the main reason behind small-scale commercial banks’ scheme of raising interest rates was to prepare for surging credit growth in 2018, as previously forecast.

Nghiem Xuan Thanh, chairman of the Board of Directors of Vietcombank, noted that in 2017, the bank’s interest rate was among the lowest in the entire financial system, yet the bank secured the highest growth rate thanks to its reputation and strong brand name. Vietcombank’s low interest rate enabled the bank’s lending rate to be relatively lower than other large-scale commercial banks.

VIR