Banks hike rates to meet capital demands    Clients at HDBank's Hoan Kiem office in Hanoi. (Photo: VNA) Hanoi - Some commercial banks have increased interest rates on dong deposits to meet rising capital demands towards the end of the lunar year. The increase in interest rates was between 0.2 percent and 0.8 percent per year. LienVietPostBank, on the first days of 2016, announced a 0.2 percent rise in the rate for short-term deposits, lifting a monthly deposit to 4.4 percent per year. The rate for 3-month deposits has also been adjusted up to 4.8 percent. Previously, Sacombank also inched up the rate for deposits between three months and five months ranging from between 0.1 percent and 0.2 percent, to 7.5 percent. BIDV also increased the rates for monthly deposits by 0.5 percent to 0.8 percent, from 4 percent to 4.8 percent per year, two-month deposits from 4.3 percent to 5 percent, and 3-month deposits from 4.7 percent to 5.2 percent. Besides, some banks have also offered promotional programmes to attract depositors. VIB, for example, offered a bonus rate of 2 percent per year for half-yearly deposits worth more than 100 million VND (4,360 USD), lifting the rate to 7.5 percent. Commercial banks expected that the rise would help them attract more deposits to balance their capital source and meet lending demands in the year-end. Besides deposits, banks also have to increase their borrowings from each other to meet the demands, statistics from the State Bank of Vietnam (SBV) revealed. In the last week of December 2015, total transaction turnover in the inter-bank market reached 162.278 trillion VND (7.1 billion USD), up 33.275 trillion VND (1.45 billion USD) against the previous week. Most of the transactions were overnight and for a one week term. According to experts, capital mobilisation at banks in 2015 was busier than previous years as the credit of the entire banking system has increased to its highest level since 2012, causing a temporary shortage of liquidity in some banks. Credit in 2015 surged 18 percent, compared with 12 percent in 2011, 10.9 percent in 2012, 12.51 percent in 2013, and 14.16 percent in 2014. The central bank in 2016 is also targeting a credit growth rate of 20 percent, and SBV Governor Nguyen Van Binh said the central bank would find it difficult to further drop interest rates as demand for funds would stay high, and the SBV needed to balance its efforts to keep the foreign exchange rate stable. To guarantee credit expansion, mobilisation needs to grow parallel while banks have to allocate resources to buy government bonds, thus putting pressure on interest rates. However, Binh said that the SBV would act to keep interest rates stable like in 2015 and strive to lower interest rates of medium and long term deposits by an additional 0.3 to 0.5 percentage points.-VNA