The "peak" remains at 11%/year
In late August and early September, the commercial banking system continuously adjusted interest rates. As a result, the interest rate level successively “broke” the 7%/year mark, then to 6%/year.
Currently, the interest rates for 6-month, 12-month and 13-month terms have dropped below 6%/year. There are very few banks listing interest rates above or below 7%/year, such as DongA Bank (7.1%/year, 13-month term), National Citizen Commercial Joint Stock Bank (6.9%/year, 12-month and 13-month terms), etc.
Among them, DongA Bank attracts attention because it creates opportunities to give customers interest rates of up to 8%/year.
Although the interest rate level continuously sets new "bottoms", currently, the peak is still maintained at 11%/year. Illustrative photo
Specifically, according to the posted schedule, the highest interest rate at DongA Bank is 7.1%/year, but this bank applies a margin policy of adding interest rates. Accordingly, for deposits of 1 billion VND or more, customers will receive an additional 0.9%. Thus, the maximum rate at DongA Bank is up to 8%/year.
But DongA Bank is not the bank with the highest deposit interest rate. Currently, the highest rate of 11%/year belongs to Vietnam Public Joint Stock Commercial Bank (PVComBank).
For many months now, PVComBank has been applying an interest rate policy of up to 11%/year for 12-month and 13-month terms. However, this incentive is only for the super-rich because PVComBank stipulates that only deposits worth VND2,000 billion or more are eligible.
In addition, Ho Chi Minh City Development Joint Stock Commercial Bank (HDBank) also continues to maintain the highest interest rate of up to 9.1%/year. And like PVComBank, HDBank stipulates that this program is only for loans of 300 billion VND or more.
There is still room to reduce operating interest rates.
Although interest rates have continuously decreased, according to Yuanta Securities Company, there is still room for interest rate reduction.
Yuanta commented that the State Bank had cut interest rates four times by the end of August 2023, and Yuanta said that the State Bank still has room to continue reducing operating interest rates, but it is still necessary to consider the next move of the US Federal Reserve (Fed) to make an appropriate decision.
According to Yuanta, it is necessary to pay attention to the exchange rate when the Fed has not shown any signs of cutting interest rates, while the State Bank's continued monetary easing policies will put pressure on the dong to depreciate.
Yuanta forecasts interest rates one year from now to be 6.029%, with a standard deviation of 0.0006%. The 95% confidence lower bound is 6.028% and the 95% confidence upper bound is 6.031%.
“We believe this result is reasonable and consistent with our forecast that the State Bank may continue to reduce the operating interest rate by another 50 basis points by the end of the year,” Yuanta said, adding that interest rates may continue to fall.
Currently, the current 12-month deposit interest rate at four state-owned banks is 6.3%. Therefore, if the State Bank issues a further 50 basis point reduction in the operating interest rate, Yuanta forecasts that the four state-owned banks will adjust their 12-month deposit interest rates to 6.0%/year or lower.
Yuanta also observed that deposit growth increased by 6.4% in Q4/2022, after the State Bank of Vietnam raised interest rates in October 2022, and the majority of deposits during this period were term deposits of 6 to 12 months.
Therefore, with deposits worth about VND496 trillion, maturing between June and December 2023, it is likely to lead to more capital flows into stocks in the first half of 2023.
However, Yuanta Securities does not believe that all maturing deposits will be diverted to the stock market. Assuming that 10% of those deposits will flow into the stock market, the actual figure will be about 49 trillion VND, equivalent to the trading value on the stock market in about two days.
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