Analyzing the potential for bank lending interest rates in 2024, economic expert, Associate Professor, Dr. Dinh Trong Thinh said that lending interest rates still have room to decrease and will continue to decrease in the early stages of the year.
“Lending interest rates are still on the decline. Recently, long-term deposit interest rates have almost reached the threshold, while short-term deposit interest rates continue to fall. Lending interest rates, although decreasing, are slow because there is a relatively large amount of capital mobilized at high interest rates in the previous period that has not been fully lent out.
After a long period of banks competing to reduce deposit interest rates, the amount of capital mobilized with high interest rates before has become smaller and smaller. At the same time, with the new low deposit interest rate, it is clear that lending interest rates have the opportunity to continue to decrease further," said Associate Professor, Dr. Dinh Trong Thinh.
According to Mr. Thinh, the time when lending interest rates drop to their lowest level depends on the level of capital need and capital mobilization of the economy, depending on the demand for loans and the capital mobilization capacity of the market. However, he predicts that the period of March - April 2024 will be the time when lending interest rates drop to their lowest level.
Lending interest rates still have room and will continue to decrease further in the early stages of 2024. (Illustration photo: Government newspaper)
Meanwhile, Dr. Nguyen Tri Hieu, a banking and finance expert, predicts that interest rate trends in countries may continue to fluctuate in 2024. Accordingly, interest rates of major central banks, especially the US Federal Reserve (Fed), may decrease from the middle of next year, but the decrease will not be large because it must be balanced with the ability to respond to inflation.
In Vietnam, Mr. Hieu predicted that bank deposit interest rates may not decrease further and will increase from the second quarter of 2024, mainly because the economy is expected to improve, thereby boosting capital demand, causing banks to increase deposit interest rates to attract capital. However, lending interest rates are still likely to decrease further in the first months of next year.
Previously, at the end of November 2023, Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu informed that lending interest rates were at their lowest in the past 20 years and many commercial banks said interest rates could not be any lower.
He also affirmed that the only remaining high interest rates are from previous terms when commercial banks mobilized at high interest rates. But it is certain that by 2024, the high interest rate will no longer be maintained.
According to analysts at Vietcombank Securities Company (VCBS), the interest rate level is expected to continue to decrease by about 1 - 1.5% in 2024. By the end of the third quarter of 2023, the average lending interest rate recorded in the financial statements of listed banks decreased by about 0.6% from the peak in the first quarter of 2023, but was still 1.6% higher than the bottom level in the fourth quarter of 2021.
KB Vietnam Securities Joint Stock Company also assessed that the average lending interest rate will have room to decrease by another 0.75 - 1.0%.
Meanwhile, the team of experts at KBSV Securities Company predicts that deposit interest rates will remain stable at low levels, while lending interest rates will continue to decrease.
KBSV experts analyzed: The mobilization interest rate level is at a historical low, even lower than the COVID-19 period for some banks. Meanwhile, the lending interest rate, due to the delay, has only decreased by about 2 - 2.25% compared to the beginning of the year. It is forecasted that the average lending interest rate will have room to decrease by another 0.75 - 1%.
Cong Hieu
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