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Banks slightly decrease interest rates
The race among banks to raise interest rates has come to an end as around 15 banks have reduced deposit interest rates and member banks of the Banking Association in HCM City have agreed to continue cutting deposit interest rates.
In late July 2008, Asia Commercial Bank (ACB) slashed interest rates on Vietnam dong deposits by 0.7-1.72% per year for deposits of 1-, 2- and 3-week terms, bringing interest rates for deposits of these terms to 15-16.5%/year.
In early August 2008, Sacombank also cut the interest rates on both its VND and USD deposits of almost all terms.
The current average interest rate for deposits of 3-12 months at state commercial banks is around 17.5%; the rate is around 17.16-17.5%/year for 3-month and 17.28-17.5% for 6-9-month term deposits at joint-stock banks like ACB and Sacombank.
Small- and medium-sized commercial joint-stock banks apply interest rates ranging from 18.2 to 18.6% for 3-6-month term deposits. For USD deposits, most banks have reduced interest rates to less than 7% per year.
Bui Tan Tai from ACB said interest rates will continue to go down.
The General Director of a commercial joint-stock bank forecast that early next week many other commercial banks will begin slashing interest rates on short-term VND deposits.
As of September 2008, banks will decrease interest rates when the consumer price index (CPI) of August 2008 and the basic interest rates are made public.
Nguyen Phuoc Thanh, General Director of the Bank for Foreign Trade of Vietnam (Vietcombank), said one of decisive factors for banks having chosen to reduce interest rates is that their liquidity has become stable. However, the reduction of lending interest rates will depend on the State Bank of Vietnam’s policy.
Thanh said from now to the end of 2008, if the CPI doesn’t fluctuate heavily, deposit interest rates may hover around 17%/year. Lending interest rates may not decrease much, but banks can apply lower interest rates for businesses that trade essential goods or exporters.
VNN
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