Deposit interest rates are expected to remain low until the middle of 2024, with a slight increase anticipated thereafter due to higher credit demand, analysts said.

However, the rates will not reach the high levels recorded at the end of 2022, following the arrest of the chairwoman of Van Thinh Phat Group, which caused a bank run at private lender Saigon Commercial Joint Stock Bank (SCB). 

The downward trend in savings interest rates has been ongoing since March last year, with almost all lenders reducing rates across various terms over the past months. 

Only a few lenders have increased rates for certain selected deposit terms, in particular those longer than 15 months.

Currently, the rate for a 12-month deposit is below 5% per year, down 0.5 percentage points from the previous month. 

Shorter term deposits, such as nine months, see rates ranging from 3 to 4% per year, while rates of six-month term deposits fluctuate between 2-4.7% per year.

For higher rates, customers should consider longer deposit terms such as 15 or 18 months, of which rates are offered at up to 5.75% per year (for online savings accounts at HDBank).

Experts predicted 12-month deposit interest rates of large commercial banks may increase by 25-50 basis points in 2024, returning to between 5 and 5.5% per year. 

Experts attributed the low deposit interest rates to sluggish credit growth. 

The total outstanding balance for credit at banks decreased by 0.72 percentage points as of the end of February compared to the end of last year, according to a report by the central bank. 

Capital demand is expected to balance out in 2024, with credit growth predicted to reach about 13-14% this year, according to a report by MB Securities Company.

Despite the ongoing drop in savings interest rates, loans, especially old loans that have transitioned from fixed to floating interest rates, have seen only minimal decreases.

Presently, floating mortgage interest rates at State-owned banks are around 10% per year.

Some private banks are offering mortgage interest rates above 11% per year, while others have rates fluctuating above 12% per year, according to a survey by Vietnam News.

Lending interest rates should decrease further in the near future, experts said.

Lower rates would allow businesses and individuals to access capital at more reasonable costs, aiding the recovery of production, business activity, and consumption, they added.

In a related issue, experts have warned that the risks of non-performing loans will continue to worsen due to troubled corporate bond and real estate markets, both of which have high non-performing ratios./.