Interest rates continue to decrease, "breaking" the 6% mark but the highest level is still 11%

Interest rates continue to decrease, "breaking" the 6% mark

Last weekend, the Government Office issued a Notice of the conclusion of the Government Standing Committee at a meeting on major tasks and solutions to stabilize the macro economy, control inflation, promote growth and ensure major balances of the economy in the last months of this year.

The Government Standing Committee noted that the State Bank should study and direct commercial banks to reduce costs, promote digital transformation, strive to continue lowering lending interest rates, create favorable conditions for people and businesses in the spirit of community responsibility, and join hands to overcome difficulties.

Also during that time, the State Bank sent a document to credit institutions and foreign bank branches requesting continued implementation of solutions to reduce interest rates.

Interest rates are continuously decreasing by 6 percentage points but the highest level is still 11 figure 1 — The interest rate level has been continuously pushed down to lower levels, most recently, the 6%/year mark has been breached. However, the "ceiling" level is still maintained at 11%/year. Illustrative photo

Specifically, banks need to reduce lending interest rates for existing outstanding loans and new loans, striving to reduce interest rates by at least 1.5-2 percentage points to support businesses and people to recover and develop production and business.

As a result, the interest rates mobilized in the commercial banking system were adjusted downwards on a daily basis. The result was that by the end of last week, the 6%/year mark was officially broken. Notably, the unit applying this interest rate was not in the Big 4 group.

Specifically, Vietnam Export Import Commercial Joint Stock Bank (Eximbank) has just announced a new interest rate schedule. Accordingly, from August 19, 2023, the highest rate at this bank is only 5.9%/year, applicable for terms from 15 months to 60 months. For terms of 12 months and 6 months, the interest rate is 5.7%/year.

Three banks including Vietnam International Commercial Joint Stock Bank (VIB), Southeast Asia Commercial Joint Stock Bank (SeaBank) and Asia Commercial Joint Stock Bank ( ACB ) all listed interest rates of 6.2%/year for a 12-month term.

The Big 4 group (including the Joint Stock Commercial Bank for Foreign Trade of Vietnam - Vietcombank, the Joint Stock Commercial Bank for Investment and Development of Vietnam - BIDV, the Joint Stock Commercial Bank for Industry and Trade of Vietnam - VietinBank and the Bank for Agriculture and Rural Development of Vietnam - Agribank) still listed deposit interest rates at the old "bottom" level of 6.3%/year.

In addition, there are many other banks applying the rate of 6.3%/year for a 12-month term such as Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Vietnam Technological and Commercial Joint Stock Bank (Techcombank) and Shinhan Bank.

Some foreign banks have very low 12-month deposit interest rates, only 3.75%/year (HSBC) and 2.9%/year (Standard Chartered).

The highest rate is still 11%/year

Although almost the entire banking system adjusted interest rates deeply to record lows, some units still maintained the old high levels. The market "ceiling" is still 11%/year.

Specifically, currently, for 12-month and 13-month terms, deposited at the counter, the interest rate at Vietnam Joint Stock Commercial Bank for Industry and Trade (PVComBank) is still maintained at 11%/year. However, only newly opened deposits with a balance of VND2,000 billion or more are eligible for this incentive.

For the remaining terms, for regular customers, the high rate is still only 6.7%/year, applied to long terms of 15 months or more.

At Ho Chi Minh City Development Joint Stock Commercial Bank (HDBank), the highest interest rate is still maintained at 9.1%/year (13-month term). However, this incentive is not for ordinary customers. Only those with a deposit balance of up to 300 billion VND will receive 9.1%/year.

In addition, with 300 billion VND and a 12-month term deposit, customers will receive an interest rate of 8.6%/year.

For ordinary customers who want to receive interest rates above 8%/year, the market offers the only option. That is DongA Commercial Joint Stock Bank (DongA Bank). At DongA Bank, the highest rate is 8.3%/year (13-month term).

In addition, there are some banks with interest rates below 8%/year for a 12-month term such as: DongA Bank (7.9%/year), Bao Viet Commercial Joint Stock Bank - BaovietBank (7.2%/year), National Citizen Commercial Joint Stock Bank - NCB (7%/year),...

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