Early in July, deposit interest rates continue to decline; is there room for further reduction?

DNHN - Beginning in early July, banks continued to reduce interest rates on savings deposits following the State Bank's reduction in operating interest rates in mid-June.

Dr. Nguyen Duc Do, Deputy Director of the Institute of Economics and Finance - Academy of Finance, predicts that interest rates will likely decrease shortly because credit growth is currently low and bank liquidity is already abundant. Consequently, the bank can reduce interest rates. This expert previously believed that interest rates could fall to the point when the COVID-19 epidemic occurred.

In the meantime, Assoc.Prof.Dr. Dinh Trong Thinh - Economist stated that although the current operating interest rate is quite low, the market interest rate is falling relatively slowly, so interest rates may fall further between now and the end of the year.

Several banks, including VietBank (VBB), NCB (NVB), Bac A Bank (BAB), OCB, Saigonbank (SGB), ABBank (ABB), and Nam A Bank (NAB), have reduced interest rates on savings deposits with terms of six months or longer.

With the implementation of the new interest rate table on June 27, 2023, VBB will reduce deposit rates by 0.1 to 0.3 percentage points for terms of six months or longer. Specifically, the 6-month deposit interest rate decreased by 0.2% to 7.5 %/year, the 12-month term deposit interest rate decreased by 0.1% to 7.6 %/year, and the 12-month term deposit interest rate decreased by 0.3% to 7.4 %/year.

NCB also reduced deposit interest rates by 0.2 to 0.3 percentage points for terms of six months or longer beginning on June 27. The interest rates for 6-month, 12-month, 24-month, and 36-month term deposits decreased to 7.15 percent per annum, 7.45 percent per annum, 7.25% per annum, and 7.15 percent per annum, respectively.

Beginning on 07/07/2023, OCB reduced the interest rate on deposits with terms of six months or longer by 0.3%. This bank reduced the interest rate on its 6-month, 9-month, 12-month, and over 12-month term deposits to 6.8% per annum, 7% per annum, 7.3% per annum, and 7.1% per annum, respectively.

Some banks, such as SHB and Techcombank (TCB), have contradictory responses to the new interest rate table for deposits.

With effect from 1 July, SHB decreased the 3-month term deposit rate by 0.2 percentage points to 4.55 %/year, while the 12-month term deposit rate decreased by 0.1 percentage point to 6.9%. On the other hand, SHB increased the interest rate for the term from 6-12 months by 0.1-0.3 percentage points, bringing the interest rate for the term from 6-9-12 months to 6.7%/year - 6.8%/year - 6.9% respectively.%/year.

On July 6, 2023, TCB increased deposit interest rates for terms of six months or longer by 0.2%. For example, this bank applies an annual interest rate of 6.8% to deposits with terms of six months or more, while terms of less than six months remain unchanged.

The deposit interest rates of four state-owned banks, including Agribank, Vietcombank (VCB), VietinBank (CTG), and BIDV (BID), remained unchanged following a series of interest rate cuts at the end of June. The rate for 2 months is 3.4% per year, the rate for 3 to 5 months is 4.1% per year, the rate for 6 to 9 months is 5%, and the rate for 12 months or more is 6.3% per year.

As of July 7, 2023, the interest rate on 1-3 month savings deposits was brought back to 3.4-4.75%/year by banks, with terms of 6-9 months in the range of 5 -7.6%/year and terms of 12 months in the range of 6.3-7.6%/year.

VietBank is the bank with the highest deposit interest rate on a 12-month term, at 7.6% per year. Next is BaoVietBank at 7.5% p.a., followed by NCB at 7.45% p.a.

VietBank maintains the highest annual interest rate for the 6-month term at 7.5%. BAB ranked second with an annual return of 7.25 percent, while VPB ranked third with 7.2 percent.

The SBV has reduced the operating interest rate four times to support the economy since the beginning of the year, with the most recent reduction occurring on June 19. The wave of interest rate reductions at banks to comply with the policy of lowering interest rates, thereby creating favorable conditions for lowering lending rates, assisting businesses in their recovery, and stimulating economic demand.

Even though the current interest rate is quite low, some analysts predict that there is still room for a further reduction.

PV (Synthesis)