Savings interest rates continue to drop sharply in September

16-Sep-2021 Intellasia | NDH | 5:02 AM Print This Post

Many banks continued to significantly lower savings interest rates in early September, in the context when the credit output is still being greatly affected by the social distancing measures. In the first two weeks of September, commercial banks reduced savings interest rates by 0.1 0.5 percentage point compared to the previous month, focusing on both short and long terms.

In the group of state-owned banks, Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV) and Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank) have made adjustments to the savings interest rates on long terms.

Specifically, at BIDV, the savings rates for terms from 12 months to 36 months were lowered by 0.1 percentage point to 5.5 percent per annum, interest paid at maturity.

The savings rate table of Agribank in early September 2021 was also cut for both individual and corporate customers. In which, for terms of 12 months to 24 months for individual customers, Agribank lowered the rates by 0.1 percentage point to 5.5 percent per annum. On the same period, corporate customers are only entitled to a savings interest rate of 4.8 percent compared to the rate of 4.9 percent per annum listed previously.

The reduction in savings interest rates was more clearly seen in the group of private commercial banks with stronger adjustments. Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) is an example. The bank’s savings rates are now 0.2 0.5 percentage point lower than the previous month, depending on term. In which, the rates for one-month and two-month terms were cut respectively by 0.2 percentage point to 2.9 percent per annum and three percent. From terms of two months to five months, the savings rates are applied at three percent per annum, 0.3 percentage point lower than the previous month; while the rate for six-month term is 4.3 percent per annum, equivalent to an increase of 0.3 percentage point.

The savings rates for terms of seven to 11 months at Sacombank were also simultaneously adjusted down by 0.4 percentage point for each term, while the 12-month rate experienced an 0.2 percentage-point decline. Particularly, Sacombank cut the 13-month savings rate by up to 0.5 percentage point to 5.8 percent per annum. This is the highest savings rate that customers can enjoy at Sacombank at this time.

For Vietnam Technological and Commercial Joint Stock Bank (Techcombank), the savings rates for terms from one month to three months and from six months to 36 months were cut down by 0.1 percentage point. The rates for four and five-month terms shared the same decrease of 0.15 percentage points compared to the survey at the end of August.

At Export Import Commercial Joint Stock Bank (Eximbank), the savings rates in September were lowered by respectively 0.4 percentage point, 0.35 percentage point and 0.3 percentage point for terms of respectively one month, two months and three months. After the adjustments, the rates of these terms are listed at 3.1%, 3.15 percent and 3.2 percent per annum, respectively. The savings rates for the remaining terms were also cut by 0.1 to 0.2 percentage point compared to the previous month.

According to analysts, the continuous decline in banks’ savings rates is due to the relatively abundant liquidity of banks, seen through the interbank interest rates which have remained at a constantly low levels in recent time.

The interbank rates in dong are currently 0.69 percent per annum on overnight term, 0.8 percent per annum on one-week term, 0.93 percent per annum on two-week term and 1.16 percent per annum on one-month term.

Meanwhile, under the impact of the Covid-19 pandemic, the ability of banks to absorb deposits remains limited. They, accordingly, have to make adjustments to balance costs.

The previous data of the State Bank of Vietnam (SBV) showed that the credit growth of the entire banking industry by the end of March was 2.95 percent compared to the beginning of the year, and 6.44 percent by the end of June, nearly doubled the 3.65 percent growth rate recorded in the first six months of 2020.

However, by July and August, when many provinces and cities across the country strongly implemented social distancing measures, the credit of the economy only increased by an addition of 0.9%, raising the credit growth rate of the entire system to 7.4 percent by the end of August.

Nguyen Tuan Anh, director of the Credit Department for Economic Sectors (under the SBV) said that the credit growth in August tended to slow down and it is expected to continue to be affected in September due to the impact of the pandemic and the social distancing situation.

The deposit growth in banks decelerated sharply.

As mentioned in the above, the savings interest rates downward trend have led to many opinions that idle money will flow into other investment channels with higher profitability, notably securities investment. The fact also shows that the capital mobilised in banks has shown signs of slowing down when savings interest rates continuously fell. The latest update of the SBV pointed out that by the end of June 2021, the residential deposits in credit institutions reached nearly 5,300 trillion dong, just 2.94 percent higher than the end of 2020. This is the lowest growth rate over the same period in the history of the published statistical data, and much lower than the average growth of 10.14 percent in late June in the period from 2012 until now.

Previously, the growth of residential deposits was recorded at a very high level of 17.18 percent in 2012 or 15.91 percent in 2013, when savings interest rates remained attractive at nine to 12 percent per annum. Nevertheless, from 2016, the growth rate has started to slow down and particularly dropped sharply in the past two years.

 

Category: Finance, Vietnam

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