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Banks slashing deposit interest rates
Nearly all commercial banks have announced VND deposit interest rate decreases, which is considered a positive move in the monetary market.
As of July 28, Saigon Commercial Bank (SCB) began applying new interest rates with the highest interest rate at 18.8% per annum. SCB was once among the banks which had the highest deposit interest rates on the market.
Other commercial banks have also quietly slashed deposit interest rates with sharp decreases from the highest peaks in June 2008.
The record 19% or 19.5% per annum interest rates are nowhere in sight. Bank interest rates are now below 18.5% per annum.
Most of Techcombank’s interest rates now are below 18% per annum, and have been applied since July 21, while the rates for 3-6-month term deposits are between 18% and 18.1% per annum. The soft interest rates are also being applied in other banks.
At SeABank, which once launched attractive promotion campaigns, the highest interest rate is 18.72%, and only applied to deposits worth more than VND500mil.
At other banks, namely VP Bank, Military Bank, Orient Bank, the popular interest rates are below 18.5% per annum.
The said interest rates prove to be 0.5-0.75% lower than the record rates seen one month ago.
When asked to comment about the interest rate shift, Nguyen Ngoc Bao, Director of the Monetary Policies Department under the State Bank of Vietnam, said that the interest rate cuts should be seen as a positive move of the banking system.
Bao said that banks cut interest rates because capital supply has improved, while usable capital at banks has become more abundant.
Moreover, Bao said that the good signs in the macroeconomy and inflation have led to the banks’ decisions to cut deposit interest rates.
Bao affirmed that the interest rate cuts will in no way affect capital mobilisation in the time to come.
Sharing the same view, Secretary General of the Vietnam Banking Association said that this is really good news.
Huong said that banks have responded to the positive changes of the national economy, realising that it is now the right time to adjust interest rates.
She added that the banking association was going to call on banks to slash interest rates, but banks took the step in advance.
As banks have cut deposit interest rates, they will be able to offer lower lending interest rates, which will make it easier for businesses to get bank loans, thus creating more favourable conditions for production and business activities.
However, Huong also said that the recent petrol price hike will put pressure on inflation, and affect the real positive interest rate policy.
Huong asserted that with the interest rate cuts, banks will still be able to maintain good capital mobilisation. In the first half of the year, VND mobilised capital rose by 20%, lower than the level of 22% in 2007, but it was satisfactory given the conditions of the economy.
VNN
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