Although many banks have begun to lower deposit rates since early November, experts say that it is not enough to create a wave at the end of the year.
Last week, the Thai Central Bank lowered interest rate for the second time in a year to 1.25 percent per annum. This is also the lowest rate since 2010 of this country.
The Central Bank of China (PBoC) has also cut medium-term lending facility (MLF) for the first time since early 2016.
Previously, some Asian countries simultaneously lowered interest rates from two to four times. India and Indonesia even loosened their fiscal policies through fairly strong tax reduction programmes to increase the competitiveness of the economy.
According to the latest statistics of the Bank for International Settlements (BIS), from the beginning of 2019 until now, a total of 46 central banks in the world have cut interest rates.
Vietnam is also following this trend when it reduced operating rates on September 16th. However, according to experts, the hope of a further operating rate cut towards quantitative easing to influence market 1 is unlikely to be feasible. The fact also shows that the deposit rates of some commercial banks have been constantly increasing since he above time.
Nevertheless, from early November, some banks have lowered deposit rates by 0.1 0.2 percentage point. In particular, Viet Capital Commercial Joint Stock Bank (VietCapitalBank) cut seven-month deposit rate from 7.8 percent to 7.6 percent per annum, and lowered the rates for deposits with terms from 24 to 60 months by 0.1 percentage point.
Similarly, in the deposit rate list of Export Import Commercial Joint Stock Bank (Eximbank), the 15- month to 18-month deposit rates were reduced to 8.1 percent per annum from 8.3 percent per annum in the previous time, while the 12-month deposit rate fell by 0.1 percentage point to 7.7 percent per annum.
At Nam A Commercial Joint Stock Bank (NamABank), the interest rate table effective from November 5th recorded a decline of 0.3 percentage point on 16-month and 17-month terms, reaching 7.4 percent per annum. Meanwhile, Vietnam Prosperity Commercial Joint Stock Bank (VPBank) lowered the deposit rates of most terms by an average of 0.1 percent per annum from November 8th.
Not only private joint stock banks, two out of the four state-owned banks have also cut deposit rates. In particular, the rates for short-term deposits from one to two months dropped from 4.5 percent to 4.3 percent per annum at Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV). The rates for these two terms at Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) are 4.5 percent per annum.
Talking about this trend, some bank leaders said that the reduction in deposit rates was under the development direction of each bank as well as under the general policy of lowering interest rates from the regulator.
In addition, although this year’s credit growth target of the entire banking industry is still 14%, each bank has their own target. By the end of the third quarter 2019, many banks have used up almost all assigned targets, and even had to ask for more room. Thus, the credit growth in the end of the year must be slowed down, and the savings interest rates, thus, will be cut to save costs.
Meanwhile, statistics in the recent report of Saigon Securities Incorporation (SSI) showed that the deposit rate cut is only local, and most deposit rates of other banks move sideways.
Specifically, considering the market in general, deposit rates are popular at about 4.1 5.5 percent per annum on terms of less than six months, 5.3 7.8 percent per annum on terms from six to less than 12 months, and 6.4 8.1 percent per annum on terms of 12 and 13 months.
According to economic expert Nguyen Tri Hieu, banks are urgently mobilising capital to meet the requirements of Circular 41 which will take effect from early 2020.
In addition, since businesses as well as economic sectors are in need of capital, banks which still have room to expand credit will have to mobilise capital to sufficiently meet the demand for loans. Hieu added that banks often keep deposit rates unchanged or increase them when mobilising capital.
Sharing similar view, analysis team at Saigon Securities Incorporation (SSI) said that the possibility of an interest rate cut in the end of this year is low due to seasonal factor, but interest rates are likely fall from early 2020.
Notably, at a recent speech, prime minister Nguyen Xuan Phuc said that the government aims to reduce lending rates by at least 0.5 percent per annum in 2020, especially the rates for priority sectors.
