DEPOSIT PRODUCTS
Definition of deposit products
Bank deposits allow customers to securely save money at a bank for a predetermined period, earning interest based on the deposit amount and duration.
A deposit refers to funds held in a bank account or with a financial institution, typically involving a transfer between parties Additionally, a deposit can serve as security or collateral for the delivery of goods or services.
Types of deposit products
A demand deposit is a conventional bank and savings account You can withdraw the money anytime from a demand deposit account without advance notice
In a demand deposit account (DDA), a customer can withdraw their money from the account at any time without paying a fee Types of demand deposit accounts include:
1 Checking account: A checking account is a standard demand deposit account Customers can deposit cash or checks into a checking account Some customers may use direct deposit to have an employer automatically deposit their paychecks into a checking account.
2 Savings account: A savings account is a demand deposit account that earns interest over time When a customer makes a deposit, the bank pays them a set percentage of interest in exchange for holding their money.
3 Money market account: A money market account is similar to a savings account, but customers may write checks to withdraw money. Customers may deposit money into this account and withdraw a certain number of times each month Typically, these accounts earn interest similar to or higher than a savings account.
Demand deposits offer exceptional convenience for daily financial activities, including bill payments, purchases, and receiving funds Account holders can easily access their money anytime through various methods, such as debit cards, checks, and online banking services.
Demand deposits offer a secure way to keep your money, as they are backed by government insurance up to a specified limit This ensures that in the event of a bank failure, the funds of account holders remain protected.
Demand deposits offer high liquidity, allowing account holders to access their funds quickly and effortlessly This characteristic makes them an excellent choice for emergency savings or short-term financial needs.
While demand deposits usually offer low interest rates, certain banks provide interest on these accounts, allowing individuals to earn a modest return on funds that would otherwise remain inactive in a checking account.
Overall, demand deposits provide a convenient and safe way to manage money, making them an essential tool for many individuals and businesses.
Time deposits, often referred to as certificates of deposit (CDs), are investment accounts that offer a fixed interest rate over a predetermined period These accounts typically provide higher interest rates compared to standard savings accounts However, it's important to note that funds must remain in the time deposit account for the entire duration of the term.
Time deposit accounts, also known as term deposit accounts, are ideal for saving money and typically provide higher annual percentage yields compared to standard savings accounts These accounts come in various types, catering to different savings needs.
1 Certificate of deposit (CD): Banks call this account a CD, but credit unions may use the term certificate of savings Customers deposit money into a CD for a set amount of time After the time has passed, the customer can withdraw the funds and collect the interest amount.
2 Individual retirement account CD: In this time deposit account, customers deposit money to save for their retirement They earn interest over time, and they can withdraw without fees at a certain date.
Time deposits generally provide higher interest rates than demand deposits since account holders commit to keeping their funds in the account for a specified duration This approach allows savers to maximize their returns on savings effectively.
Time deposits offer guaranteed returns with a fixed interest rate throughout the entire term, ensuring that account holders earn a consistent rate of return regardless of fluctuations in market conditions.
Time deposits are a low-risk investment option, as they are insured by the FDIC up to a specific limit This feature makes them an attractive choice for individuals seeking to earn higher returns on their savings while minimizing risk.
Time deposits encourage savings discipline by requiring account holders to commit their funds for a set duration, helping them resist the urge to withdraw money prematurely and stay focused on achieving their savings goals.
Targets of deposit products
Deposit services in Vietnam, including savings accounts, checking accounts, and certificates of deposit (CDs), cater to diverse target audiences due to their unique features and benefits These services appeal to various segments of the population, each seeking specific financial solutions tailored to their needs.
In Vietnam, various deposit services cater specifically to individual consumers, including savings and checking accounts These accounts typically provide convenient features like ATM access, online banking, and mobile banking, facilitating everyday transactions for users.
Small and medium-sized enterprises (SMEs) in Vietnam represent a crucial target market for deposit services Numerous banks in the country provide tailored accounts for SMEs, including current accounts with overdraft options and savings accounts that offer competitive interest rates.
Many banks in Vietnam provide specialized accounts for students and young adults, featuring benefits like free ATM withdrawals, reduced transaction fees, and other tailored services to meet their unique financial needs.
As Vietnam's economy expands, it attracts more foreign investors and expatriates, leading to a rising demand for banking services tailored to their needs Numerous banks in Vietnam provide accounts specifically for foreigners, offering features like foreign currency deposits, international money transfers, and specialized services designed to facilitate their financial activities.
In Vietnam, several deposit services cater specifically to seniors, providing tailored features like complimentary checks, discounted safe deposit boxes, and various benefits designed to meet the unique needs of older adults.
Terms of deposit products
Besides the terms defined in the Client Agreement, the following capitalized terms are used in the Conditions with the following meanings:
1 Deposit is an amount of money that the Client deposits with the Bank under the conditions specified by the deposit transaction;
2 Deposit Transaction is a transaction whereby the Client undertakes to deposit a certain amount of money with the Bank for an agreed period and the Bank undertakes to refund such amount to the Client under the agreed conditions;
3 Start Date of the Deposit is the banking day specified by the deposit transaction when the Client undertakes to place the deposit with the Bank;
4 Expiry Date of the Deposit is the banking day specified by the deposit transaction when the Bank undertakes to refund the deposit to the Client;
5 Banking Day is any calendar day other than a Saturday, Sunday or a national holiday or a public holiday in the Republic of Estonia
6 Transaction Account is the Client’s bank account with the Bank that is used for settlements associated with the deposit transaction
The term of deposit indicates the duration for which an account holder commits to keeping their funds in a time deposit account, like a certificate of deposit (CD) This period can vary significantly, spanning from a few months to several years, based on the account holder's preferences and the bank's offerings.
The term length of a deposit significantly influences the interest rate provided Typically, longer deposit terms yield higher interest rates since account holders commit their funds for an extended duration In contrast, shorter deposit terms usually result in lower interest rates due to the bank's reduced certainty regarding the duration of fund availability.
When choosing a term for a time deposit account, it's crucial to evaluate your financial goals and liquidity requirements For those expecting to access their funds soon, a shorter deposit term is advisable Conversely, if you're saving for a long-term objective, a longer deposit term may be more suitable.
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Withdrawing funds from a deposit account before the term ends can lead to penalties and fees, diminishing the interest earned Consequently, it's crucial to thoughtfully evaluate the deposit term and ensure that the funds can be securely committed for its duration.
DEPOSIT PRODUCTS AND PRICES OF SELECTED
Military Commercial Joint Stock Bank: MB Bank
2.1 Deposit products for personal customers:
The currencies involved include VND, USD, EUR, AUD, GBP, and any additional mobilized currencies designated by the General Manager of MB or an authorized representative, subject to periodic adjustments.
- Local residence individuals are allowed to deposit savings in foreign currencies;
- For VND currency: 6 months, 12 months, 24 months.
- For foreign currencies: from 1 month to 60 months.
Minimum deposit amount : VND1,000,000 / USD100 / EUR100 / AUD
- USD: monthly or at maturity
- EUR, AUD, GBP: at maturity
Interest Rate : Fixed rate for the deposit term (please refer to the Bank's interest rates).
The currencies accepted include VND, USD, EUR, AUD, GBP, and other mobilized currencies as designated by the General Manager or an authorized representative of MB, subject to periodic adjustments.
- Local residence individuals are allowed to deposit savings in foreign currencies;
- For VND currency: from 1 to 3 weeks or 1 to 6 months
- For foreign currencies: from 1 month to 60 months.
Minimum deposit amount: VND1,000,000 / USD100 / EUR100 /
- VND: at maturity, monthly or prepaid interest
- USD: monthly or at maturity
- EUR, AUD, GBP: at maturity
Interest Rate : Fixed rate for the deposit term (please refer to the Bank's interest rates).
Utility : Depositors are allowed to withdraw part or all of their deposit before the maturity date of the deposit:
Method of interest payment : at maturity
- Fixed in deposit term and flexible according to the deposit balance regulated by MB from time to time;
- Early withdrawal makes the customer receive the lowest demand deposit interest rate
Term : from 1 to 12 or 24/36/48/60 months
Minimum deposit amount : 1 billion VND or equivalent foreign currency Method of interest payment : at maturity
- Early withdrawal makes the customer receive the demand deposit interest rate
Minimum deposit amount : VND 1,000,000 / 1 account
Method of interest payment : at maturity
- Fixed or Accumulated during the sending period
- Early withdrawal makes the customer receive the demand deposit interest rate
Term: from short term to long term
Interest Rate: Ladder interest rate according to the accumulative deposit balance on the account and automatically adjust flexibly according to market interest rate fluctuations.
- Send money anytime, anywhere, with no limit on the number of deposits and the number of extra deposits;
Customers can choose from a variety of deposit channels, including cash deposits and transfers at bank counters, automatic periodic money transfer services from their payment accounts, ATMs, internet banking through eMB services, and mobile banking options like eMB Mobile Banking and MB.Plus.
Interest rate : Floating interest rate during deposit period;
- Diverse and free transaction channels: at the counter, via InternetBanking (eMB), Mobile Banking (BankPlus, MB Plus), ATM/POS,automatic money transfer
- No limit on the amount, number of times and days of deposit during the deposit period;
2.2 Deposit products for corporate customers:MB Bank SME customer deposit products:
2.2.1 Term of payment at the end of the period:
A customer is an organization that is legally established and operates according to the laws of Vietnam or the relevant country of establishment, while also adhering to Vietnamese legal provisions This organization requires a time deposit.
- Simple program, fast processing time
- Option term with many attractive interest rate
- Account information is completely confidential.
Currency: Vietnamese dong and other foreign currencies, if they are foreign currency accounts, must be used in accordance with foreign exchange management regulations.
Term : All terms, from 01 to 03 weeks, 01 months to 12 months, 24 months, 36 months, 48 months, 60 months.
Deposit interest : The interest will be paid according to MB's interest rate table at the end of the term.
Interest rate table in October 2022
Lãi trả trước (% năm) VNĐ (*)
Lãi trả sau (% năm) USD
Lãi trả trước (% năm) USD (*)
Our target customers are small and medium-sized enterprises (SMEs) that are legally established and operated in Vietnam This includes a wide range of entities such as businesses, economic organizations, securities firms, insurance companies, and fund management companies However, our services do not extend to credit institutions or non-resident customers.
Currency: Vietnamese dong, US dollar, Euro
- 2 months to 60 months (full month).
- Minimum deposit: VND 100,000,000/USD 5000/EUR 5000
Deposit interest payments are made regularly, with options for 1 month, 3 months, 6 months, and 12 months However, the regular interest payments for 3 months, 6 months, and 12 months are applicable only to deposit terms that correspond to these specific durations.
- Maximize economic benefits from temporarily idle capital
- Convenient receipt of principal and deposit interest: customers can get it at MB or any bank
- Customers' flexibility in choosing the deposit term and interest term.
A customer is an organization that is established and operates in accordance with the laws of Vietnam or the relevant country where it is based This organization must also adhere to Vietnamese legal regulations and has a requirement for time deposits.
Interest payment method: fixed interest is paid immediately after the customer deposits
Currency: Vietnamdong, US dollar, Euro.
Interest rate: according to the MB interest rate table published in each period
Minimum deposit: VND 1000000/USD 100 /EUR 100.
Utilities: Once you send the money,
- Various deadlines to meet customer needs,
- Have the right to withdraw and settle funds in advance in case of unexpected demand,
A customer is an organization that is legally established and operates under the laws of Vietnam or the relevant country of establishment, while also adhering to Vietnamese legal provisions, and is in need of a time deposit.
Currency: Vietnamese dong, US dollar and euro
Initial minimum amount: VND 100 million or USD 5000/Euro
Interest rate: according to the interest rate table published by MB in each period, the interest rate shall be applied at the time of deposit.
Interest calculation method: based on the actual number of days sent
Withdrawal in advance: the customer must withdraw all the principal and complete all contract settlement when withdrawing in advance, and enjoy unlimited interest
- Add the original supplement several times before the expiration date
- Competitive interest rate and flexible term
- Have the right to withdraw and settle funds in advance in case of unexpected demand
- Allow mortgage deposit contracts to obtain loans
A customer is an organization legally established and operating under the laws of Vietnam or the respective country of establishment, and it adheres to Vietnamese legal regulations while seeking time deposit services.
The customer can choose the time limit for sending on a specific date
Payment method: fixed interest is paid at the end of the period Duration: from 7 days to 365 days
Currency: Vietnamese dong, US dollar, Euro
Interest basis: based on actual days
Minimum deposit: VND 50000000/USD 25000/Euro.
- Flexible and proactive deadline selection based on customer needs
- Interest maximization income calculated based on actual days
- Have the right to withdraw and settle funds in advance in case of unexpected demand
2.2.6 Deposit term selected by customers:
Customers: According to the current regulations of MB, institutional customers, medium customers (SME), medium customers (Midcorp) and large customers (Large Corp) or non-bank financial institutions (FI nonbanks).
Currency: Vietnamese dong, US dollar, Euro
Deposit term: selected and determined by the customer when signing the contract The deposit term is one month or more, but not more than one year
Interest rate table: issued separately according to the products of each period.
Payment method: based on actual days.
Customers can enjoy the convenience of interest charges based on their specific financial plans, allowing them to pay interest only for the actual number of days their deposits are held, rather than adhering to traditional timeframes like a full year, month, or week.
Customer: The customer is an organization established and operated in accordance with the laws of Vietnam, and needs an investment deposit certificate.
Interest rate and time limit: flexible (day, month, interest rate, time limit specified by MB)
Investment amount: multiple of VND 100000
Payment method of principal and interest: the principal and interest are paid once on the due date without automatic turnover
Flexible advance sales, according to the regular advance sales rate specified by MB
- Maximize economic benefits from temporarily idle capital
- Customers enjoy high return on investment
- Flexible liquidity, partial or full advance sales according to customer demand.
FIGURES AND ISSUES
Figures
As of December 31, 2022, the total customer deposit balance across 27 banks exceeded 8.2 million billion VND, reflecting a 10% increase compared to the end of 2021, according to the fourth quarter financial statements.
The top three positions in the ranking were held by state-owned banks, with BIDV leading the way by mobilizing over VND 1.47 million billion in deposits, reflecting a 7% increase since the end of last year.
Vietcombank and VietinBank secured the second and third positions, respectively, with customer deposit balances exceeding VND 1.2 million billion, reflecting increases of 8% and 10% compared to the end of 2021.
Deposits of these three banks accounted for 48% of total deposits to customers of the whole system, reaching more than VND 3.9 million billion.
Sacombank stands out as the leading private bank, boasting over 454,740 billion VND in customer deposits, reflecting a 6% increase since the start of the year Close behind is MB, with customer deposits exceeding 443,605 billion VND, marking a growth of 3.2% from the beginning of the year.
TPBank leads the banking sector with an impressive customer deposit growth rate of 40%, making it the fastest growing bank in the system Following closely are VPBank with a 25% increase, and both ABBank and MSB, which recorded a growth of 24% LienVietPostBank achieved a 20% rise, while MB saw a 15% growth in customer deposits.
1.2 Deposit growth rate slows down
According to newly updated data of the State Bank, at the end of August
2022, customer deposits at the credit institution system were more than VND 11.3 million billion, up 3.37% compared to the end of the year 2021.
Since the start of the third quarter, deposit growth has significantly slowed, with economic organizations experiencing a decline of over VND 171 trillion in July and August Although individual deposits saw a modest increase of more than VND 17 trillion, the overall deposit balance across the system dropped by nearly VND 154 trillion within just two months.
Residential deposits have shown consistent growth for eight consecutive months, reaching over VND 5.63 trillion, closely approaching the VND 5.67 trillion held in corporate deposits This trend follows a significant rise in corporate deposits during the 2020 period.
In November 2021, residential deposits surpassed previous records for the first time, marking a significant shift in the financial landscape However, this trend reversed at the start of 2022, as the residential customer segment emerged as the primary catalyst for capital mobilization across the entire credit institution system.
SCB offers the highest deposit interest rates across all terms compared to other banks, and it provides the same competitive interest rate for online deposits as for in-branch transactions.
Right after SCB are DongABank and PGBank for second and third place respectively which have the same interest rate as SCB
Deposit interest rate as at 2021 February, applied to personal customers,the deposit amount is less than 1 billion VND.
Issues
The State Bank of Vietnam's recent increase in the operating interest rate aligns with a global trend among countries raising rates to combat high inflation and currency devaluation against the USD This move supports the government's goal of flexible management and coordinated monetary and financial policies to control inflation, stabilize the macro-economy, and aid economic recovery As a result, many commercial banks are preparing to raise both deposit and lending rates, intensifying the dual impact of increased operational, mobilization, and lending rates.
High interest rates in countries can restrict social investment, leading to stagnation, recession, unemployment, and increased bankruptcy This situation puts pressure on future inflation due to the burdens of debt and interest on bank deposits and the state budget.
For example, when businesses have difficulties with high interest rate:
- In terms of production, enterprises face difficulties in accessing capital, or increasing capital costs This will lead to a cost-push effect, increasing the selling price of the product.
Businesses frequently rely on loans from commercial banks to support and grow their production and operations However, rising interest rates can lead to delays in these expansion plans, ultimately impacting revenue growth and profitability.
When businesses raise the selling prices of their goods, it can lead to a decline in consumer demand This decrease in demand may subsequently impact production scales and result in a reduced need for labor recruitment.
2.2 Businesses can’t meet the demands of banks
Small and medium-sized enterprises (SMEs) often face challenges such as limited operational capacity, weak competitiveness both domestically and internationally, and reliance on outdated technology Additionally, many SMEs struggle with a lack of management experience and skilled human resources Their low risk tolerance and poor resilience to macroeconomic fluctuations further hinder their growth Furthermore, these enterprises have yet to establish connections with one another or collaborate with larger firms, which is essential for developing a competitive regional value chain.
Many small and medium-sized enterprises (SMEs) rely on private or family management styles, often lacking a long-term vision and comprehensive business strategies This limited management capacity hinders their ability to identify and develop sustainable business plans and investment opportunities, while also contributing to a lack of understanding of regulations related to business loans.
Small and medium-sized enterprises often face significant risks regarding collateral due to their low asset values and limited cash flow Additionally, many lack a strong credit history and high credit ratings with banks As a result, banks frequently require collateral alongside the appraisal of business plans, but these enterprises often struggle to provide sufficient assets for mortgage purposes due to their constrained financial capacity.
The transparency of accounting data in small and medium enterprises (SMEs) is often lacking, as many do not prioritize the development of robust financial information systems Consequently, financial statements frequently go unaudited, leading to limited accuracy and reliability in the reported data.
Lending to small and medium-sized enterprises (SMEs) poses challenges for banks due to the inherent characteristics of these businesses, such as their shorter establishment periods and unstable operations This lack of stability and transparency in the information provided complicates banks' ability to evaluate loan effectiveness and assess customer reputation, ultimately hindering informed lending decisions.
Small and medium enterprises have difficulty in meeting the conditions related to collateral according to the general regulations of the banking system.
Small and medium-sized enterprises (SMEs) often struggle with limited information on securing bank loans, coupled with challenges in preparing necessary documentation Consequently, the loan processes and procedures of commercial banks can be quite complex and daunting for these businesses.
Solutions
To build a strong brand and foster belief in enterprises, it is crucial to overcome limitations and enhance access to capital Management agencies play a vital role in creating a favorable business environment and supporting enterprise development through effective guidelines and policies While these agencies facilitate capital access, businesses must take initiative and adhere to market discipline Ultimately, the responsibility for effective operations, building trust, and developing a reputable brand lies with the enterprises themselves.
Small and medium-sized enterprises (SMEs) must prioritize innovation and enhance their management skills to boost competitiveness By implementing professional practices, ensuring financial transparency, and operating efficiently, these businesses can strengthen their relationships with banks This approach will ultimately improve credit access for SMEs, fostering their growth and development.
To thrive in the era of Industrial Revolution 4.0, small and medium-sized enterprises must prioritize innovation in management and production organization By proactively adopting advanced technologies and modern management practices, these businesses can enhance operational efficiency and labor productivity This shift away from traditional family-style management will enable them to produce high-quality products at competitive prices, ultimately strengthening their market position and overcoming investment limitations.
Commercial banks must establish capital mobilization policies that align with state mechanisms, market trends, customer needs, and their own business strategies They should implement a flexible interest rate management system that grants autonomy to bank branches, allowing for attractive and adaptable deposit interest rates in response to market fluctuations Additionally, to minimize costs and enhance operational efficiency, banks need to develop tailored capital mobilization products for various industries, leveraging low-cost, long-term capital from financial institutions and international organizations Strengthening partnerships with domestic and foreign financial entities will also be crucial for accessing medium and long-term currency sources.
To effectively mobilize capital, it is essential to conduct thorough market research and segment customers based on regional characteristics This enables the development of tailored capital mobilization products and targeted promotional policies for different customer segments Additionally, diversifying and enhancing the portfolio of capital mobilization products while increasing their utility and implementing cross-selling strategies will further optimize customer engagement and satisfaction.
Commercial banks must conduct a thorough review of their processes, procedures, transaction documents, and related programs concerning savings deposit transactions They should enhance the savings deposit transaction process and implement effective warning and monitoring systems for deposit transactions and capital mobilization It is crucial to focus on the review and control aspects, ensuring strict adherence to internal processes and regulations regarding the handling of customer funds to minimize operational risks within the system.
Fourth, actively organize the program to connect businesses - banks.
To effectively support businesses, it is essential to enhance the program that connects banks and enterprises by broadening its scope This initiative should not only address capital needs and alleviate business challenges but also promote the development and expansion of various banking services Emphasizing the growth of non-cash payment solutions will facilitate better credit access by leveraging financial information and cash flow insights Additionally, expanding payment methods and offering unsecured loans based on the operational and financial performance of enterprises will further strengthen this connection.