The State Bank of Vietnam (SBV) has announced plans to reduce the ceiling levels of deposit rates for short-term tenors and lending rates for priority sectors from today, November 19. Local commercial banks have also raced to lower their interest rates in recent days.
Accordingly, the maximum rates for savings of one to six months will be cut from 5.5 percent to 5%, while the highest rates for tenors of less than one month will be reduced from 1 percent to 0.8%.
In addition, the central bank will drop the lending rate for dong short-term loans for priority sectors from 6.5 percent to 6%.
Meanwhile, local commercial banks have cut their annual deposit rates for the peak season for capital mobilisation.
For example, the Bank for Foreign Trade of Vietnam (Vietcombank) and Vietnam Bank for Industry and Trade have lowered their rates by 20 basis points for multiple tenors. In late September, the Bank for Investment and Development of Vietnam also cut the interest rates for one- and two-month deposits by 20 basis points.
Moreover, Vietnam Prosperity Joint Stock Commercial Bank has reduced the deposit rates by 10 basis points for all tenors, though it had said in a statement released on November 8 that it would cut the rates for short-term savings only.
Smaller banks have also entered the deposit rate reduction race. At Tien Phong Bank, the interest rates have been cut by 10 basis points for savings of six to 13 months and 30 basis points for those of more than 13 months.
Viet Capital Bank has also dropped its rates by 20-50 basis points for deposits of eight to 60 months.
A representative of Viet Capital Bank stated that the deposit rate cut is aimed at gradually creating capital resources with lower costs to better serve customers in priority sectors, in line with the State’s policies.
According to Dr Can Van Luc, an expert in finance and banking, banks have lowered their deposit rates to adjust the capital mobilisation plan. Banks have ensured the flow of capital for the rest of the year, so the deposit rate reduction is reasonable.
However, the rates have been reduced slightly, so the difference in the deposit rates among banks remains significant.
On the other hand, banks have also cut their lending rates. For example, Vietcombank on November 18 cut the lending rate for priority sectors for the third time this year to 5%. It has also lowered the rates by 50 basis points for ordinary loans to enterprises.
In addition, Vietnam Maritime Joint Stock Commercial Bank has offered a reduction of up to 2 percent for new customers and 1 percent for existing customers.
At a recent seminar, Dr Bui Quang Tin, president and CEO of BizLight Business School, remarked that many banks have launched preferential credit packages to attract more customers.
The SBV’s interest rate reduction has also paved the way to reach the government target of reducing the lending rates by at least 50 basis points next year.
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