Housing Development Bank, An Binh Commercial Joint-Stock Bank, Sacombank, and other banks have hiked rates as high as 9 percent since the beginning of this month.

Tran Phuong, development planning manager at Bank for Investment and Development of Vietnam, said though credit growth in the first quarter was a mere 3 percent, demand would surge soon.

“With the economy showing clear signs of a recovery, businesses will need more loans to kick-start production in the next few months,” he said.

Economic growth would pick up and could reach 5-5.5 percent this year, AFP quoted Prime Minister Nguyen TanDung as saying on April 15.

Ly Xuan Hai, general director of Asia Commercial Bank, said he expects credit growth to increase in this quarter, which means an urgent need for fresh funds at banks.

Phan Dao Vu, general director of Bao Viet Commercial Joint-Stock Bank, said banks are trying to raise more funds for later loans, especially with deposit mobilization in the first quarter not as high as expected.

Deposits grew an estimated 3.34 percent by the end of last month from the end of 2008, the central bank said in a statement posted on its website early this month.

Deposits have been falling in HCMC, with money flowing into the rebounding stock and real estate markets, an official at the central bank’s city office told Thanh Nien.

Vu said banks also need to hike savings interest rates to raise money to lend under the government’s loan subsidy program.

Phuong said his bank, BIDV, used to maintain a balance between dong and dollar loans. But now it is focusing on mobilizing dong to lend to businesses under the 4 percent subsidy program, which was recently extended to the end of 2011 and includes more beneficiaries.

The State Bank of Vietnam said by last Friday banks have lent VND218 trillion (US$12.27 billion), an 8.06 percent increase over the previous week.

Spreads under pressure

Analysts said the savings rates of 8-9 percent per year that many banks are offering are comparatively high considering the current rate cap of 10.5 percent on loans.

But Nguyen Quoc Sy, deputy general director of Western Bank in Can Tho City, said his bank does not have a problem offering up to 8 percent with the removal of the cap on consumer loans providing flexibility.

Banks have been allowed to negotiate interest rates on consumer and credit card loans since February.

Still, not all banks find it easy to attract deposits, with some even resorting to “unhealthy ploys,” an industry source told Thanh Nien.

Some banks desperate for dong deposits are offering large commissions to officers at rival banks to get them clients, the source said, noting the commission could be as much as 1 percent of the deposit.

Reported by Thanh Xuan - Hoang Ly