The weekly capital market report released by Investment Analysis and Advisory centre of Saigon Securities Incorporation (SSI) for the week until December 13th showed that the banking liquidity improved thanks to the increase in dong supply of commercial banks and the net injection of 1.627 trillion dong via Open Market Operation (OMO) by the State Bank of Vietnam (SBV).
Thanks to that, the interbank interest rates gradually reduced and closed the week at 3.68 percent per annum on overnight term (down by 34 basis points compared to the previous week) and 3.9 percent per annum on one-week term (down by 20 basis points).
Market 1 did not record any significant adjustment. The deposit rates still fluctuated from 4.1 to five percent per annum on six-month term, 5.5-7.5 percent per annum for terms from six months to less than 12 months, and 6.4-7.9 percent per annum on 12 and 13-month terms. Since the interest rates for terms from six months and more have remained at high levels, commercial banks have been growing well in the last four months and increased the proportion of medium and long-term deposits in mobilisation structure.
According to statistics of the SBV, the ratio of short-term funds used for medium and long-term loans of the system decreased from 28.4 percent in the end of 2018 to 27.3 percent in the end of September 2019. It is within the roadmap to lower this ratio to no more than 30 percent in all banks on October 1st 2022 (according to Circular 22).
SSI’s analysts believed that after the current peak period, interest rates may slightly fall but the interest rate gap between banking groups will still be significant.
In fact, the interest rate difference between banking groups is still large although it has been cooled down compared to the time before November 19th when the SBV lowered the interest rate cap for terms of less than six months.
Specifically, for the group of small commercial banks or large banks with traditionally high interest rates such as Saigon Commercial Joint Stock Bank (SCB), the interest rates on long terms from 12 months and more, interest rates are still above eight percent per annum. Meanwhile, at other large banks, especially state-owned banks, including Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Vietnam Technological and Commercial Joint Stock Bank (Techcombank), etc., the highest interest rate is less than seven percent per annum. The interest rate difference, hence, is more than one percent.
For terms from six to less than 12 months, the interest rate difference is the largest because some banks only apply rates from 5.3 6.3 percent per annum (popular at large and healthy banks) while some others still offer rates of more than seven percent per annum or even nearly eight percent per annum.
Only the interest rates for terms of less than six months sees insignificant difference when the SBV imposes the ceiling interest rate of five percent per annum. The current rates for terms from one to less than six months are common at 4.5 five percent per annum.
