As of June 2020, Saigon Hanoi Commercial Joint Stock Bank (SHB) still maintains the highest deposit interest rates in the system with 9.2 percent per annum on term of 13 months, applicable to deposits of over 500 billion dong. In addition, the bank announced the 12-month and six-month deposit rates with similar condition at respectively 8.9 percent and 7.8 percent per annum. These number are 1.2 2.3 percentage points less than SHB’s interest rates of the same terms but with deposit amount of less than 500 billion dong. According to findings of NDH, the highest 13-month interest rate is being used by SHB as a basis for calculating lending interest rates.
In addition to SHB, some banks have similar policies. With the same conditions of deposits being over 500 billion dong and term of 13 months, Viet Capital Commercial Joint Stock Bank (VietCapitalBank) announced a rate of 8.5 percent per annum and An Binh Commercial Joint Stock Bank (ABBank) offers a rate of 8.3 percent per annum.
Meanwhile, at Export Import Commercial Joint Stock Bank, for 13-month term and deposits of more than 100 billion dong, customers opening new accounts enjoy a rate of 8.4 percent per annum. For term of 24 months, customers can also enjoy 8.4 percent per annum if depositing more than 500 billion dong, 8.2 percent per annum if depositing from 300 to 500 billion dong, and eight percent per annum if depositing from 200 to 300 billion dong. National Citizen Commercial Joint Stock Bank (NCB) also applies rates of eight to 8.1 percent per annum for terms of 12 36 months with no conditions.
The above banks are those that maintain interest rates of more than eight percent per annum for term of 12 months in the market, while most banks offer rates of 5.5 7.9 percent per annum. Compared to the previous time, this interest rate has decreased relatively.
Banks simultaneously cut interest rates for terms of more than six months.
Asia Commercial Joint Stock Bank (ACB) announced the reduction of 10 40 basis points for terms of more than six months from June 17th. For example, the six-month rate was cut by 40 basis points from 6.3 6.6 percent per annum to 5.9 6.2 percent per annum, depending on the deposit amount. The nine to 12-month interest rates fell by 10 basis points while terms of 12-months and more were cut by five basis points.
Similarly, at Saigon Commercial Joint Stock Bank (Sacombank), the interest rates for terms of one to three months dropped by five to 15 basis points, ranging around 4.1 4.25 percent per annum. The rate fell from 6.2 percent to six percent per annum for six-month term, 6.8 percent to 6.7 percent per annum for term of 12 months, and the rates for terms from 15 to 36 months decreased by 40 60 basis points to 6.7 to seven percent per annum.
Vietnam Prosperity Commercial Joint Stock Bank (VPBank) also cut interest rates for all medium and long terms. In particular, the rates for terms from six to 11 months were lowered by 20 35 basis points to 6.2 6.6 percent per annum for deposits of less than 10 billion dong. For deposits of more than 10 billion dong, the rates were raised by 20 basis points to 6.8 percent per annum. Similarly, the 12-month rate was cut by 20 basis points to 6.4 6.6 percent per annum for deposits of less than 10 billion dong and raised by 35 45 basis points for deposits of more than 10 billion dong. Meanwhile, the interest rates for terms of more than 12 months fell by 20 basis points, applicable to deposits of less than three billion dong and increased by 10 20 basis points for deposits of three billion dong or more.
At Tien Phong Commercial Joint Stock Bank (TPBank), the deposit rates for terms of more than six months dropped by 20 30 basis points to 6.1 to 7.3 percent per annum. Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank) cut deposit rates of terms from 12 months or more by 30 basis points to 6.5 percent per annum. Some other banks also made similar moves, such as Nam A Commercial Joint Stock Bank (NamABank), Orient Commercial Joint Stock Bank (OCB), etc.
State-owned banks almost made no change in the deposit rate level. Their rates are the lowest in the system. The 12-month deposit rate of Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV) and Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank) is 6.5 percent per annum, while that of Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) is 6.8 percent per annum.
Liquidity remains abundant.
In the last two months, the SBV almost made no new transaction on the open market operation (OMO). The dong injected through treasury bills continuously matured. In the week, the last two trillion dong (of the 147 trillion dong of 91-day bills issued in the first quarter) matured, and were injected into the OMO.
Interest rates continued to decline on the interbank market, closing the last week at 0.375 percent per annum, down by five basis points for overnight term and 0.5 percent per annum for one-week term, down by 10 basis points.
Commercial banks recorded a rate reduction of 20 40 basis points in the first week of June and a further decrease in the third week. From the beginning of the year, interest rates have fallen by 60 120 basis points.
The reduction of interbank interest rates to a four-year low and the abundant liquidity situation is the motivation for banks to lower deposit rates. Leaders of some banks said they would make the most of the capital flows on the interbank market to reduce capital costs.
However, if depending on interbank capital flows to lend in market 1, banks will face liquidity risk. According to financial expert Nguyen Tri Hieu, the capital in market 2 is very short, thus it poses a potential risk of term difference if lending in market 1. Banks need to limit this activity, especially for medium and long-term loans in residential market and corporate business market.
