Many banks have reduced deposit rates. Photo: Internet

Strongly reduce deposit interest rates

According to information from the State Bank (SBV), from March 6, four state-owned commercial banks (Vietcombank, BIDV, VietinBank, and Agribank) decreased by 0.2%/year, commercial joint stock banks decreased by 0.5%/year compared to the interest rates of each bank from February 27, 2023 for the term group from 6 to 12 months.

Surveying banks’ deposit interest rates showed that many banks had announced a new interest rate margin in the direction of a sharp decrease in terms.

Early in the morning of March 6, Vietcombank announced a new deposit rate margin and adjusted it down in some terms, continuing to stay in the lowest group of the market. Specifically, for the form of opening a passbook at the bank’s transaction counter, the interest rates for 6-month and 9-month terms is from 6%/year to 5.8%/year; 12-month term interest rate remained unchanged at 7.4%/year, and interest rates for terms more than 12 months decreased by 0.2% to 7.2%/year.

For commercial banks, at Sacombank, deposit interest rates have also been adjusted down by 0.3-0.5% per year compared to the old interest rate margin, the highest interest rate at the counter has been adjusted to 8.4%/year for a term of 36 months. The interest rate for 12-month term also dropped to 7.9%/year, the 6-month term to 7.5%/year.

At VPBank, despite keeping the interest rate for terms of less than six months at a maximum of 6%/year, the interest rates for 6-month and 12-month terms decreased by 0.5 percentage points, down to 8.4%/year and 8.8%/year, respectively.

At LienVietPostBank, the interest rate for 6-month term decreased to 7.6%/year; 12-month term interest rate is also only 8%/year. However, for online savings, the highest interest rate is 9.2%/year (term from 13 months).

At the end of 2022, banks also agreed not to push the deposit interest rate beyond 9.5%/year in terms. These commitments have been spread, helping the trend of reducing interest rates to spread more widely. Since the end of February 2023, a series of commercial banks have continuously reduced deposit interest rates.

Interest rates are "going down"

According to the SBV, agreeing to reduce deposit interest rates helps commercial banks reduce costs, thereby reducing lending interest rates, and supporting businesses and the economy, especially in priority areas.

The SBV said that in February 2023, the interest rate level was stable and in fact, interest rates in the market tended to decrease. The average new lending interest rate has decreased by about 0.4%/year; 22 commercial banks have reduced their average lending rates.

Recently, in response to the calls of the Government and the SBV, many banks have launched preferential credit packages with interest rates reduced by 1-2 percentage points for businesses in many fields.

According to experts, lowering interest rates is inevitable, because, in the past few months, the speed of disbursing credit to the market by commercial banks has been slow. Purchasing Managers Index (PMI) has always been below 50%, reflecting business conditions in the manufacturing industry continued to decline, enterprises produced in moderation, limiting business expansion, which resulted in low demand for loans. Meanwhile, if banks mobilize deposits but cannot lend because of high interest rates, they will not make profits, so interest rates need to be lowered.

In the recent macro report, Bao Viet Securities Company said that with high interest rates, the real estate sector would face difficulties and the economic outlook would be less positive, credit growth for the whole year 2023 would be only about 13%. Moreover, the pressure to raise interest rates of the US Federal Reserve (Fed) gradually decreased along with the system liquidity gradually stabilizing. These are conditions for deposit interest rates to be stable or further reduced, facilitating loan interest reduction.

Regarding the management agencies, the SBV said that they have closely monitored domestic and international monetary developments, and have forecast inflation and market interest rates to manage interest rates in line with the macro balance, inflation, and monetary policy objectives. Simultaneously, the SBV has directed credit institutions to actively reduce costs and lending interest rates to support enterprises to recover and develop their production and business.