Sacombank cut their rates slightly between 0.05 and 0.1 percent per year. The bank’s rates for 6, 12 and 18 months were reduced to 5.7 percent, 6.5 percent and 6.55 percent, respectively. After that, VP Bank announced new interest rates with a cut of 0.1 percent per year for deposits at all tenors.
Last week, Eximbank reduced its six month deposits to 5.5 percent from 5.6 percent per year. The bank’s highest rate of 8 percent for 36 month deposits worth more than 10 billion VND (444,500 USD) has been also adjusted down to 7.8 percent.
ACB also applied new interest rates, of which nine-month deposits were cut by 0.1 percent to 5.5 percent per year.
Despite the commercial banks cut their deposit rates, the deposit rates listed at State-owned banks have so far remained unchanged. For example, Vietcombank’s rates for 2-month and 6-month deposits are steady at 4.8 percent and 5.4 percent per year, respectively. The 6.5 percent rate is unchanged for deposits with tenors of more than 12 months.
The State-owned bankswere the first to cut lending rates recently. However, banking experts said that without a cut, the State-owned banks’ rates remain low compared with joint stock commercial banks. Experts attributed the deposit interest rate reduction to a good liquidity in banks amid a slowdown in credit growth recently.
Credit growth by May 8 was 3.69 percent, which inched down against 4 percent late last month, according to statistics from the State Bank of Vietnam (SBV)’s Credit Department.
Analysts at SSI Research said that a slowdown in lending could cause commercial banks to have a redundant liquidity, which would help reduce deposit interest rate.
If the economic growth continues its slowdown as in the first quarter this year, and inflation remains low, experts said that banks could further cut interest rates.
Report from Maritime Bank’s Economic Research Centre also showed that developments on the inter-bank market and the open market operations (OMO) are also reflecting expectations about the possibility of reducing interest rates in the near future.
The market has noticed the movements of interest rates in the inter-bank market when it continued to decline rapidly in the past few weeks. Dong interest rates in terms of less than one month decreased from 0.9 to 1.8 percentage points, in which the shorter the terms, the stronger the decline. This trend began since the end of April 2016, bringing dong interest rates on the inter-bank market to the record low in the past nearly three years.
With low interest rates in the past weeks, transactions in the market became less active than before. Operations on OMO were also quite similar to the monetary market when credit institutions had no demand for borrowing through mortgage operations The central bank has continued the net withdrawal in five weeks through OMO, bringing the balance of mortgage operation to zero percent since May 18.
Experts from Maritime Bank’s economic research centre said, the developments of the inter-bank market and the OMO showed that the liquidity in the dong of the banking system is pretty good. This can also be the consequence of the Government’s target to reduce the lending rate to support economic growth, giving rise to expectations in the market of the possibility of lower interest rates in the near future.
SBV Governor Le Minh Hung has recently also pledged that the banking system would try to cut the lending rate by roughly 1 percent this year. The central bank also affirmed that it would regulate the inter-bank rates in accordance with the market interest rate.
