Saigon Hanoi Commercial Joint Stock Bank (SHB) is at the top of savings interest rate with the applicable rate of 9.2 percent per year for 13-month term, with deposit amount of over 500 billion dong. The common rate for 12 month terms is 7-7.8%. This is 1.2-2.3 percentage points higher than SHB’s same-term interest rate with deposits of less than 500 billion dong. According to the Companion newspaper, the highest 13-month interest rate is used as a basis for calculating loan interest.
Banks simultaneously lowered interest rates for terms of less than six months after the decision of the State Bank of Vietnam (SBV). In addition to SHB, some banks have similar policies, with the same conditions of minimum deposit of over 500 billion dong and 13-month term as Viet Capital Commercial Joint Stock Bank (Viet Capital Bank) announces interest rate of 8.5 percent per year, and An Binh Commercial Joint Stock Bank (ABBank) is 8.3 percent per year.
Meanwhile, at Vietnam Export Import Commercial Joint Stock Bank (Eximbank), with a term of 13 months and a deposit of over 100 billion dong, customers opening new accounts will enjoy an interest rate of 8.4%. Besides, with a 24-month term, customers can also enjoy an interest rate of 8.4 percent for deposits of over 500 billion dong, 8.2 percent for deposits of 300-500 billion dong and 8 percent for deposits of 200-300 billion dong. National Citizen Commercial Joint Stock Bank (NCB) also recorded interest rates of 8-8.1 percent with terms of 12-36 months and without conditions.
The above banks are also the units that keep interest rates over 8 percent in the market, while most fluctuate between 7.2-7.8%/ year for 12 month periods. Compared to before, this interest rate has decreased relatively.
After SBV lowered the ceiling interest rate for demand and term deposits with maturity of less than one month from 0.5 percent to 0.2 percent per year, the maximum interest rate for term deposits from one to less than six months, from 4.75 percent to 4.25 percent per year. Many banks have lowered interest rates for short, medium and extended periods to some long terms.
For example, Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) lowered the interest rate for one-to-six-month terms by 25-75 basis points, in which, the three to five-month term interest rate was 4.25 percent per year, one to two-month term was 4.15-4.2 percent per year. At the same time, the interest rates for terms above six months also dropped by 10-30 basis points, such as six-month interest rates from 6-7 months, down from 6.5 percent to 6.2-6.25 percent per year, nine-month rates also decreased to 6.4 percent from 6.7 percent per year, or over 12 months also decreased by 10-20 basis points.
Similarly, Asia Commercial Joint Stock Bank (ACB) lowered the interest rates from one to six months to 25-50 basis points around 4.1-4.25 percent per year. The terms for over six months also dropped by 10 basis points, to 6.8 percent per year for six-month term, 6.9 percent per year for the nine-month term.
Kien Long Commercial Joint Stock Bank (Kienlongbank) reduced the rate for less than six month terms by 50-60 basis points to 4.25 percent per year, and for terms of above six months to 20 basis points to 6.6 percent per year for the period of 6 months to 10 months, 7.3-7.7 percent per year with a term of 12 months or more.
This situation also occurred in many banks such as Bao Viet Joint Stock Commercial Bank (BaoVietBank), SHB, Vietnam Prosperity Joint-Stock Commercial Bank (VPBank), and Vietnam International Commercial Joint Stock Bank (VIB).
ABBank also lowered interest rates for terms of less than six months by 25-30 basis points in accordance with the regulations of SBV. However, the term of over six months is still maintained. Meanwhile, Vietnam Technological and Commercial Joint-Stock Bank (Techcombank) reduced 25-35 basis points to bring the rate for less than six month terms to 4 percent per year. However, for a term of more than six months, the bank raised the interest rate by 20-30 basis points to 5.8 percent per year for 6-11 month term and 6-6.1 percent per year for over 12 month term.
In the group of state-owned banks, Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) decreased by 30 basis points with the term of less than one month to the ceiling rate of SBV, while reducing by 25 basis points with the term of less than three months to 4.25 percent per year but kept the same rate for term of one month at 4.1%. While Vietnam Bank for Agriculture and Rural Development (Agribank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), and Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) kept one-month interest rates at 4 percent and reduced 25 basis points for three months to 4.25%. The term of over six months has not changed. These four banks also have the lowest interest rates in the system.
Nguyen Dinh Vinh, deputy general director of VietinBank, said that SBV’s rate cut would create favourable conditions for banks to mobilise cheap capital in the context of implementing preferential loan packages.
SBV lowered the interest rate twice for the year, which is a very good condition for banks to reduce lending rates to individual and corporate customers. The move, on the one hand, demonstrates SBV’s flexible and appropriate monetary policy management in the context of the economy affected by the Covid-19 pandemic. On the other hand, the above action is a signal that SBV and the banking industry have cheaper capital sources to provide people and businesses in the current economic context because of the abundant liquidity source at commercial banks.
Commenting on the actions of SBV, the economist Nguyen Tri Hieu said that this decision was very important because it would affect the general interest rate of the economy. When reducing the regulating interest rate would indirectly lower the interest rate on the market 1, although there would be a delay.
On the other hand, according to Hieu, SBV’s move is aimed at reducing capital costs for banks. However, in the current state of the economy, although SBV does not perform, perhaps the market will also adjust itself accordingly because the credit activity of banks has decreased compared to the same period last year.
The expert also said that in the near future, in case the economy needs to be boosted or the situation becomes more serious, SBV may continue to reduce the interest rates further.
