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Vietnam banks rush to slash deposit rates

Vietnam banks rush to slash deposit rates

Saturday, March 18, 2023, 14:14 GMT+7
Vietnam banks rush to slash deposit rates
Banks are lowering deposit rates. This image shows a security guard at a commercial bank in Vietnam. Photo: Nam Tran/ Tuoi Tre

Many banks in Vietnam started cutting deposit interest rates from Thursday, just one day after the State Bank of Vietnam, or the central bank, lowered operating interest.

At commercial banks, deposit rates for tenors of one month to below six months are kept at the ceiling rate of six percent per year set by the central bank.

The rates for terms of over six months have been revised down sharply compared to those in early March.

The deposit rates for a 12-month tenor mainly stand at 8.4-8.8 percent per year, down 10-20 basis points. Some banks have even cut the rates by 50 basis points for the same term.

VPBank now quotes its rates at 8.3 percent for online deposits of six months and 8.7 percent for a 12-month tenor, down 50 basis points.

VietABank is also applying new deposit interest rates at 8.5-8.8 percent for tenors of six months or longer, felling by 0.5 percentage points.

The tenors of 18 months, 24 months, and 36 months are seeing the highest deposit rate at 8.8 percent.

Four state-owned commercial banks, including VietinBank, Vietcombank, BIDV, and Agribank, are offering the lowest deposit rates in the local market. At Agribank, the deposit rate for a 12-month term stands at 7.2 percent, down 20 basis points.

The key interest rate cuts this time are an important move to facilitate the downward trend of interest in the coming time, said the State Bank of Vietnam.

Accordingly, credit institutions will cut lending rates to help ease financial difficulties for enterprises and residents, and boost economic recovery.

Over the past few months, the central bank has been employing multiple synchronous and prompt solutions to stabilize interest rates, moving toward lowering lending rates.

The State Bank of Vietnam also told commercial banks to keep deposit interest stable and reasonable while making it appropriate for capital mobilization and risk management.

In addition, credit institutions are banned from affecting the stability of the monetary market and offering high deposit interest rates exceeding the designated cap.

The central bank also asked credit institutions to well monitor savings rates for interest stability.

In February, commercial banks lowered savings rates to make it easier to slash lending rates to support businesses and back production and business recovery. The rates were down 20-50 basis points for tenors of 6-12 months

Savings rates are kept stable now. The savings rate is around 6.7 percent a year, while the lending rate stands at about 9.4 percent a year.

The State Bank of Vietnam cut key interest by 0.5 to one percentage point on March 15.

As per the central bank’s Decision 313, the rediscount rate is down from 4.5 percent to 3.5 percent.

The rates for overnight loans in interbank electronic payments and lending to cover capital shortfalls in clearing payments of the central bank for credit institutions fall from seven to six percent. The refinancing interest rate remains unchanged at six percent.

Pursuant to Decision 314, the central bank revises down the maximum short-term lending interest in Vietnamese dong for borrowers for their operations in the economic sectors and industries such as agriculture, rural development, small and medium business, and exports.

The rate is five percent, down 50 basis points.

The maximum interest on short-term loans in dong at people’s credit funds and microfinance institutions tumbles from 6.5 percent to six percent.

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Tieu Bac - L. Thanh / Tuoi Tre News

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