Deposit rates at commercial banks at the beginning of July dropped sharply even though the State Bank of Vietnam (SBV) showed no change in its policies. Pioneers of interest rate cut are the banks with the largest market share in deposits such as Vietcombank, BIDV, VietinBank, Techcombank, VPBank, Sacombank, HDBank, and VIB. Some other banks also said that they would reduce interest rates of mobilisation from July 6.
At present, deposits from one month to less than six months at big banks are only 3.4 percent to 3.95 percent per year, much lower than the ceiling of 4.25 percent per year that SBV allows, of which the lowest belongs to Techcombank. For terms from six months to less than 12 months, the interest rate is 4.4 percent 6.3 percent per year, the lowest is in the group of State-owned commercial banks. For 12-month term and above, the interest rate ranges from 6 percent 6.5 percent per year, especially for large deposits of tens of billion dong to hundreds of billion dong the interest rate is higher for long term but the highest is only 7.3 percent per year.
In the group of small banks, previously, ceiling interest rates for terms of below six months was mainly 4.25 percent per year. The current highest rate is 4.2 percent per year while a number of banks offer only 3.8 4 percent per year. The interest rate of six to 11 months is commonly around 7 percent per year while for terms of 12 months and more, most of them have dropped to below 8 percent per year, in some cases, banks pay interest of over 8 percent per year for VIP customers with deposits of 500 billion dong or more.
Compared to the interest rate applied before July 1, the new interest rate schedule at banks is now about 0.25 0.5 percentage points lower.
Not only for dong, but also for foreign currency deposits such as JPY (Japanese Yen) or AUD (Australian Dollar), interest rates have also been sharply reduced by banks compared to the previous period of June 30, some banks have cut rates up to one percent (for example VPBank and Sacombank). The simultaneous and strong adjustment of banks strongly catches the market attention.
According to Pham Manh Thang, deputy general director of Vietcombank, the reduction of interest rates is mainly due to market supply and demand, which is also in line with the direction of the government and SBV to cut lending rates and support the economy.
Sharing the same view, Ngo Quang Trung, general director of Viet Capital Commercial Joint Stock Bank (Viet Capital Bank), said that lowering deposit rates was the most solid basis for reducing lending rates and is an essential tool for banks to accompany customers in the current difficult period. In addition, the banking system is in excess of liquidity, so it is reasonable to lower interest rates. Trung added that Viet Capital Bank would also reduce the deposit rates from the beginning of next week.
Meanwhile, a SBV functional director shared that the regulator welcomed the move of commercial banks. When deposit rates fell, banks would have more room to lower lending rates that the government, SBV and the whole economy were expecting. This leader added that there would be no change in SBV’s interest rate policy.
But in the opinion of some experts, the current interest rate adjustment is inevitable because banks are in surplus of capital while credit is not accelerating. According to statistics, in the first six months of credit growth, including loans for individuals, organisations and corporate bonds, only reached over two percent the lowest level in the same period of the last five years. “Banks keep mobilising a lot, paying high interest without being able to provide loans or cheap loans, which will only add losses”, an expert commented.
In addition, due to the impact of the Covid-19 pandemic and the order to close the border in other countries, the import-export businesses faced difficulties and could not import and export goods, so the demand for foreign currency loans reduced, forcing banks to cut deposit rates for foreign currencies other than USD (currently at zero percent) such as AUD, euro or JPY. A number of banks have issued notices from July 1, the renewed deposits in AUD, JPY will only enjoy zero percent interest rate instead of 0.2 1.3 percent per year as before.
Experts, hence, forecast that interest rates in both market 1 and 2 in the near future will remain low because credit has not been able to break through in the context of complicated global disease.
