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Banks cutting interest rates following FED cut
Two days after the US FED released their decision to cut the interest rate to 0-0.25%, Vietnamese banks, on December 18, announced cutting their interest rates on US$ deposits
A series of banks announced interest rate cuts on December 12. VIB Bank has slashed the 1-month term deposit interest rate to 4.1% per annum, 3-month to 4.5%, and 6-month to 4.8%. Habubank has offered the lower interest rates of 2.5% per annum for a one-month term, 4% for 3-months, and 4% for 6-month term deposits.
Techcombank’s rates remain relatively high, 3.8% per annum for 1-month term, 4.2% for 3-months, and 4.5% for 6-months. ACB’s new interest rates prove to be lower than Techcombank’s, but still higher than some other joint-stock banks: 2.7% for a 1-month term, 3.1% for 3-months, and 3.4% for a 6-month term. The rates of Eximbank are as follows: 3.7% for 1-month, 4% for 3-months and 4.3% for 6-month term deposits.
Explaining the massive interest rate cuts, Bui Thi Mai, General Director of Habubank, said that the mobilized capital has become plentiful, while it is difficult to find borrowers at this time. Moreover, banks have had to slash their interest rates because the US FED has cut its interest rate.
Mai added that banks now have plentiful capital to lend, but lack dollars to be sold to clients who need dollars for making payments.
Some big banks told the press, on the afternoon of December 18, that they are considering cutting the interest rates further in upcoming days.
State-owned banks and equitised Vietcombank have slashed their deposit interest rates more sharply than joint-stock banks. At Vietcombank, the 1-month term US$ interest rate is now at 1.8% per annum, while the interest rates are 2.5% for 3-month and 3% for 6-month term deposits. Meanwhile, the Bank for Development and Investment of Vietnam (BIDV) is now offering only 2.2% for 3-month deposits and 3% for 6-month deposits.
An expert of BIDV said that the US$ interest rates, though they have been slashed, remain relatively high and still need to be further decreased. The expert has cited two reasons for his viewpoint. First, the US$ interest rates on the international market have been sliding sharply, which has made the deposits at foreign banks become unattractive. Second, the demand for US$ loans in Vietnam is decreasing due to the difficulties of the national economy.
The expert said that banks once hesitated to slash interest rates for fear of losing clients, but they have realized that they will have to do it or else they will suffer.
DTCK
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