Some banks cut deposit interest rates

Hanoi (VNA) - Several commercial banks have unexpectedly slightly cut the dong-denominated deposit interest rates in the past week, according to report by the State Bank of Vietnam (SBV).

BIDV has inched down the rates for demand and 36-month terms from 0.3 percent to 0.2 percent, and 7 percent to 6.8 percent per year, respectively, since November 29.

Agribank has also lowered the rate for demand term from 0.5 percent to 0.3 percent per year.

In addition to the two State-owned banks, some commercial joint stock banks have also cut deposit rates.

After cutting 0.1 percent for 6, 13 and 18-month deposits on November 9, the Viet Capital Bank on November 29 applied new rates for some terms, down 0.05 percent and 0.1 percent for 1-5 month terms and 13-18 month terms, respectively. Currently, the bank’s rates are 5.3 percent for 1-2 month terms, 5.4 percent for 3-5 month terms, 7.5 percent for 13-month term and 7.9 percent for 18- month terms.

Sacombank has also lowered the rates for short-term deposits, cutting rates for 2-3 month terms to 4.9 percent from 5.2 percent per year.

According to SBV, currently, the popular deposit interest rates are 0.8-1 percent per year for demand and under 1 month terms, and 4.5-5.4 percent for 1-6 month terms. The popular rates applied for medium- and long-term deposits of 6-12 months and above 12 months are 5.4-6.5 percent and 6.4-7.2 percent, respectively.

The rate cut is aimed at balancing the banks’ liquidity and is a positive move to cut input costs.

However, according to a leader of a joint stock commercial bank, who declined to be named, it would be hard to forecast interest rate movements in the next two months. He explained that demands for loans often rise sharply ahead of Tet (the lunar New Year), which falls in late January 2017.

Experts meanwhile were concerned about the strengthening of the US dollar against the dong, saying that if the dollar continues to rise, dong savings holders could transfer to the American currency, causing pressure on dong liquidity. If that happens, commercial banks would have to adjust up interest rates to attract depositors.

The abundance of dong liquidity in the banking system is lower than a few months ago in the wake of rising credit growth. According to the SBV, lending as of November 22 had expanded by around 14 percent compared with December 2015, with dong loans rising 15.3 percent.-VNA