Interest rates to stay stable in 2022: Experts

Hanoi (VNA) – With many banks slightly increasing deposit interest rates since the start of 2022, experts hope interest rates will become more attractive to depositors shortly. While enterprises are worrying that this move will subsequently affect lending interest rates, the State Bank of Vietnam said it is considering some measures for reducing the rates by 0.5 - 1 percentage point over the next two years.

Deposit interest rates rebound

In January, deposit rates at many banks such as Sacombank, VPBank, SHB, SCB, and ACB grew slightly, by 0.1 - 0.3 percent, from early December. Notably, some have set the annual rates for 36-month online savings accounts at almost 6.8 percent.

However, the hikes are mostly recorded at commercial joint-stock banks, while deposit rates at State-run banks remain stable.

Can Van Luc, a financial expert, held that this move is not abnormal or worrying but matches the law of supply and demand in the market.

Deposit rates may continue rising slightly to help credit organisations attract more deposits amid a number of more attractive investment channels.

Other experts shared the view that commercial banks are likely to raise deposit rates by 0.25 - 0.5 percentage points to seek more deposits, but the increase will not have much impact on lending interest rates.

Pham Thi Hoang Anh, Director of the Banking Academy, said lending interest rates may increase as a result of higher deposit rates. Commercial banks will judge the market’s borrowing and lending demand to decide on the rates for long-term savings accounts and loans.

“I think that in the coming time, deposit rates will stay at this level and be under the ceiling limit set by the State Bank,” she went on.

Meanwhile, deposit rate hikes have triggered some manufacturers’ concerns.

Insiders explained that in the post-pandemic period, many businesses are still struggling with labour shortages, surged input costs, and a disrupted market, so they need time to recover and capital to invest in supply chains. Higher deposit rates, together with global and domestic inflation pressure, may subsequently lead to higher lending rates, posing a big concern for them.

Actions needed to cut interest rates further

Enterprises said if lending rates are kept stable in the first half of 2022 or continue declining, they will greatly help stabilise input costs and give them more recovery chances.

Experts forecast lending rates may hike in the short term but remain stable or even decline in the long run, especially for priority areas, if appropriate efforts are made.

A bank leader noted interest rate increases are recorded in several banks to balance supply and demand and are not a common trend. This year, inflation pressure does exist but will not be too high and will be controlled properly. Therefore, interest rates in 2022 will stay stable.

An expert from the Vietcombank Securities Company (VCBS) also believed lending rates this year may decrease to aid businesses’ post-pandemic recovery, elaborating that the flow of foreign investment into Vietnam has created a favourable condition for the State Bank to regulate the money supply and liquidity when necessary while interest rates and the forex market have been kept stable.

Echoing this view, an expert from the Bao Viet Securities Company (BVSC) also held that inflation pressure and the prospect of fully opening the economy may force banks to increase deposit rates, but only slightly to support economic recovery in the face of latent risks posed by the COVID-19 pandemic.

At a recent National Assembly session, Governor of the State Bank of Vietnam Nguyen Thi Hong said facing a global upward trend in inflation, central banks have begun tightening monetary policies and raising interest rates, so it is very difficult to reduce. However, in the socio-economic recovery and development programme, the Government also considered some measures so that credit organisations can cut the rates by 0.5 - 1 percentage point in the next two years./.