Interest rates hit rock bottom
After many months of continuous downward adjustments, in the last days of December, deposit interest rates continued their journey to record lows. The Big 4 group (including 4 state-owned banks: Joint Stock Commercial Bank for Foreign Trade of Vietnam - Vietcombank, Joint Stock Commercial Bank for Investment and Development of Vietnam - BIDV, Joint Stock Commercial Bank for Industry and Trade of Vietnam - VietinBank and Vietnam Bank for Agriculture and Rural Development - Agribank) are in the Top of units with the lowest deposit interest rates.
With non-term interest rates, Vietcombank, BIDV and VietinBank all listed at 0.1%/year, while Agribank is 0.2%/year.
With a 1-month term, Vietcombank and Agribank listed at 2.2%/year, BIDV and VietinBank applied a common rate of 2.6%/year.
In the last days of 2023, deposit interest rates fell sharply and hit “rock bottom”. However, entering 2024, some expected interest rates to continue to fall, while others predicted they would rise again. Illustrative photo
With a 6-month term, 3.5%/year is the interest rate that both Vietcombank and Agribank apply, BIDV and VietinBank have a listed rate of 4%/year.
With a 12-month term, Vietcombank has the lowest interest rate on the market (4.8%/year). This figure at BIDV, VietinBank and Agribank is all 5%/year.
Currently, the average interest rate of commercial banks is around 5.5%/year. Only a few units have outstandingly high interest rates. They are Vietnam Joint Stock Commercial Bank for Industry and Trade (PVComBank), Ho Chi Minh City Development Joint Stock Commercial Bank (HDBank) and DongA Bank. The common feature of these preferential rates is that they are only for the super-rich.
Specifically, the highest interest rate on the market belongs to PVComBank at 10.5%/year. This promotion applies to 12-month and 13-month terms with deposits up to VND2,000 billion.
From December 18, 2023, HDBank announced a new interest rate schedule and a decrease in most terms. However, the highest rate at HDBank is still 8.4%/year for a 13-month term with a minimum deposit of VND 300 billion. In addition, HDBank also has an interest rate of 8%/year for a 12-month term and a deposit of VND 300 billion or more.
According to DongA Bank's latest listing, the highest interest rate at this bank is only 5.8%/year applied for a 13-month term. However, if the deposit amount is over 200 billion VND, customers will enjoy a higher rate, up to 7.5%/year.
Some expect further decline, others predict a rise again
Vndirect Securities Company believes that deposit interest rates will continue to decrease in 2024. Vndirect reported that as of December 14, 2023, the average 12-month deposit interest rate of commercial banks had decreased to 5.0%/year, down 0.3 percentage points compared to the end of October 2023 and about 2.8 percentage points compared to the end of 2022.
Thus, mobilization interest rates have fallen lower than the Covid-19 period (2021 - first 6 months of 2022) due to excess system liquidity in the context of weak credit demand.
As of November 30, system-wide credit increased by 9.15% compared to the beginning of the year, lower than the 12% increase from the beginning of the year in the same period last year and far from the target of 14% for the whole year of 2023. In addition, the Government also promoted public investment and fiscal expansion, thereby pumping more money into the economy.
With the US Federal Reserve (Fed) no longer mentioning the possibility of raising the policy interest rate and forecasting the possibility of cutting interest rates three times in 2024, the State Bank will have more room to loosen monetary policy. The State Bank will consider cutting the policy interest rate by 50 basis points next year in case the Fed cuts interest rates as planned and Vietnam's economic growth is lower than expected.
“Therefore, we expect 12-month deposit interest rates to remain low at around 5.0% per year from the end of 2023 to the end of 2024. We expect lending rates to continue to maintain a downward trend in the remaining months of the year thanks to the rapid decline in capital costs of commercial banks recently,” Vndirect forecasts.
Meanwhile, MB Securities Company (MBS) believes that with the forecast that the Fed's operating interest rate will drop to approximately 4% by the end of 2024, the pressure on the exchange rate will not be large, and the State Bank will have room to maintain the current monetary policy.
However, MBS still forecasts that interest rates may increase slightly in 2024 when commenting: "We forecast that 12-month deposit interest rates of major commercial banks will be able to increase by 25 - 50 basis points, returning to 5.25% - 5.5% in 2024".
Source
Comment (0)