Banks continue to lower savings interest rates

28-Oct-2021 Intellasia | NDH | 5:02 AM Print This Post

Many banks continued to lower savings interest rates. The highest savings interest rate is currently7.1 percent per annum with special conditions in Asia Commercial Joint Stock Bank (ACB) and Vietnam Technological and Commercial Joint Stock Bank (Techcombank). The low interest rate is said to be the reason for the slowdown of the residential capital mobilisation growth.

ACB announced its savings interest rate of 7.1 percent for deposits of 30 billion dong or more on a term of 13 months. This is the lowest condition among banks that have announced special interest rates. For deposits of less than 30 billion dong, the interest rate is 6.3 percent per annum on term of 13 months, 5.3 percent per annum on 12-month term. This interest rate level is 0.2 0.3 percentage point less than the rates in the previous month.

Techcombank also announced a special interest rate of 7.1 percent per annum for customers depositing from 999 billion dong or more and committing to not withdraw before maturity.

The rates are 6.99 percent per annum at Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank), 6.95 percent per annum at HCM City Development Commercial Joint Stock Bank (HDBank), and 6.8 percent per annum at Military Commercial Joint Stock Bank (MB), etc. with different conditions applicable for high-value deposits of over 200 300 billion dong on terms of 12 13 months.

For ordinary deposits at banks, the interest rates are often one to 2.5 percent per annum lower than the same term, popularly ranging from 4.85 percent 6.8 percent per annum. Particularly at Techcombank, the savings interest rates for priority customers are from 4.4 percent to 4.8 percent per annum, the lowest among Vietnamese private joint stock banks. In the group of state-owned banks, Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) applies 12-month savings interest rate at 5.5 percent per annum, while this rate at the remaining banks is 5.6 percent per annum.

Compared to the previous month, some banks have raised savings interest rates, typically Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank). From October 19th, the bank increased the savings interest rates by 0.4 percentage point on terms from one to three months, reaching 3.1 3.3 percent per annum; and by 20 basis points on terms from six to less than 12 months, reaching 4.3 4.5 percent per annum; while the rates for terms of 12 months or more were increased by 10 40 basis points to 5.3 5.4 percent per annum. For term of 36 months, Sacombank is currently applying the rate of 6.1 percent per annum, 0.4 percent higher than the rate recorded in the survey in early October. Similarly, the savings interest rates for terms of 24 months and 18 months were also increased by 0.4 percentage point to six percent per annum and 5.9 percent per annum, respectively. In September, Sacombank lowered the savings interest rates by 20 basis points on many terms.

Adverse adjustments of savings interest rates

Techcombank also increased savings interest rates by 20 basis points on terms from one to three months, reaching 2.8 3.05 percent per annum. However, the rate for terms from 12 months or more were all cut by 40 basis point to 4.8 4.9 percent per annum.

Similarly, LienVietPostBank also lowered savings interest rates by 60 110 basis points on most terms. In particular, the rates for terms of one to three months were cut by 60 basis points to 3.1 3.4 percent per annum. For terms from six to 12 months, the rates were reduced by 80 basis points to four percent per annum, while a reduction of 110 basis points was applied to savings interest rates from 12 months or more, reaching 5.5 percent per annum.

Nam A Commercial Joint Stock Bank (NamABank) also simultaneously cut savings interest rates by 10 40 basis points, depending on each term. Some other banks lowered the savings interest rates since last month, such as Asia Commercial Joint Stock Bank (ACB), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank), etc.

The move to reduce savings interest rates of banks is said to aim at balancing with the lending interest rate cut to support customers following the request of the SBV. On the other hand, in the interbank market, interest rates are still low, showing the abundant liquidity of the system. According to Bao Viet Securities Company (BVSC), the current savings interest rates of private joint stock banks are at the lowest zone ever since 2017.

The report of the research centre of Saigon Securities Incorporation (SSI Research) maintained the view that monetary policy will continue to be loosen to support the economic recovery after the pandemic and credit institutions will slightly lower the savings lending interest rate levels in the last quarter of this year.

Banks’ reduction of interest rates is considered as one of the reasons for the gradually slow growth of capital mobilisation and even a net withdrawal month in 2021.

Ata of the SBV by the end of August pointed out that people’s deposits were 5,300 trillion dong, up by 2.95 percent over the beginning of the year, lower than the 2.97 percent recorded in late July as people net withdrew nearly one trillion dong. The number in August was the smallest growth in people’s deposits, considering the same periods of the past five years.

The growth rate of people’s deposits in the first eight months was 15.4 percent in 2016, 12 percent in 2017, 8.4 percent in 2019 and dropped to 5.46 percent in 2020. In the past five years, people’s deposits tended to slow down, showing that people are tending to deposit less money in banks. The annual growth of people’s deposits was 17.4 percent in 2016, 13.54 percent in 2017, and continuously declined four years later. By 2020, this number fell to 6.46%.

Talking at the press conference of the SBV, deputy Governor Dao Minh Tu said that the savings interest rate level of banks has been very low and it is not possible to attach the reduction of input interest rates to lower output interest rates from now to the end of the year. According to the SBV’s leader, the inflation rate is currently low (1.82 percent in the first nine months of the year), but according to forecast of the International Monetary Fund (IMF), the inflation this year will be about three percent and the National Assembly’s goal is four percent. On the other hand, the input interest rates of banks have continuously declined since 2020 to about five to 5.5 percent per annum. Depositors will have a positive real interest rate if the inflation is maintained at three percent,

Deputy Governor Tu said that if mobilising at too low interest rates, people will not deposit money in banks and switch to buying houses and gold. Banks mainly borrow from people to lend back to the economy. Therefore, credit institutions must maintain their input capital, stabilise interest rates, and ensure the benefits of depositors in order to mobilise capital.

Viet Dragon Securities Company (VDSC) forecast the total mobilisation growth this year at 9.2 12.3%, and it is likely to stop at a single-digit number even when considering the seasonal factor of businesses’ needs for depositing money.

 

Category: Finance, Vietnam

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