Commercial banks simultaneously adjust deposit interest rates with a downward trend.

In late February and early March 2024, many commercial banks (CBs) simultaneously adjusted their deposit interest rates with a downward trend for all terms. According to forecasts, in the coming time, deposit interest rates are likely to continue to remain at a low level. This is a favorable condition for banks to reduce lending rates, promptly removing difficulties for production and business.

According to the synthesis of the State Bank of Vietnam (SBV) branch in Ha Nam province, by the end of February 2024, credit institutions in the province mobilized an estimated VND 75,300 billion in capital, an increase of VND 893 billion compared to the beginning of the year. Of the total mobilized capital above, the interest rate for mobilizing deposits with terms from 1 month to less than 6 months is commonly at 4 - 4.5%/year; terms from 6 months to 12 months are commonly at 5 - 6%/year; terms over 12 months are commonly at 6 - 7%/year. At the end of February and the beginning of March 2024, commercial banks simultaneously adjusted the mobilization interest rate table with a downward trend in all terms. Many banks apply interest rates for deposits of 1-2 months at around 2.45%/year, 3-5 months at around 2.85 - 3%/year, and over 12 months at 4.5 - 5%/year. In the case of customers making online savings deposits, the interest rate is added an average of 0.25 - 0.4 percentage points depending on the deposit term.

At the Joint Stock Commercial Bank for Investment and Development of Vietnam ( BIDV ), the savings interest rate table has been adjusted to decrease in many terms. Accordingly, after a decrease of 0.2 - 0.3 percentage points, the interest rate range is recorded from 1.9%/year to 5%/year, with interest received at the end of the term. Details are as follows: for the term of 1 - 2 months, BIDV is implementing the interest rate at the same level of 1.9%/year. Customers will enjoy the same interest rate of 2.2%/year when depositing savings at the two terms of 3 months and 5 months, 3.2%/year is the interest rate BIDV applies for the term of 6 - 9 months. Deposits with terms of 12 - 18 months will have the interest rate set at the same level of 4.8%/year. Currently, individual customers are enjoying the most preferential interest rate when depositing money at the two terms of 24 months and 36 months at 5%/year. This is also the highest interest rate currently being implemented by BIDV. For Lien Viet Post Joint Stock Commercial Bank (LPBank), the highest interest rate applied for individual customers is 5.6%/year.

**Customers transact at Agribank Thanh Liem Branch.** Photo: Tran Thoan

Through surveys at branches of: Vietnam Bank for Agriculture and Rural Development (Agribank), Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), as well as groups of joint stock commercial banks such as: Vietnam Technological and Commercial Bank (Techcombank), Military Bank (MB), Asia Commercial Bank (ACB), Saigon Thuong Tin Bank (Sacombank), Ho Chi Minh City Development Bank (HDBank), Saigon - Hanoi Bank (SHB) ... mobilization interest rates also decreased sharply.

According to economic experts, at this time in previous years, when deposit interest rates decreased, the amount of deposits also decreased because they had to compete with many other attractive mobilization channels such as real estate, stocks, gold, foreign currency. However, this year, in the context of many investment channels such as real estate, stocks, gold... falling into a state of "freezing" or fluctuating erratically, not really vibrant, difficult to make profit, so people still choose savings as a safe place, although deposit interest rates have decreased sharply. Moreover, instead of reducing the amount of deposits, in the beginning of this year this number has tended to increase and many banks have excess capital, leading to credit growth at a low level compared to many recent years. Continuing to decrease deposit interest rates is also considered a condition for banks to reduce lending interest rates, thereby stimulating credit growth and promoting production development.

Mr. Luong Duc Cuong, Director of Agribank Thanh Liem Branch, said: Compared to mobilized capital, up to now the branch has a surplus of thousands of billions of VND. Reducing mobilization interest rates is also a favorable condition for the branch to reduce lending interest rates. In the coming time, Agribank Thanh Liem Branch will focus on investing in customers who are households and businesses borrowing capital to develop livestock, cultivation, develop services, transportation, and invest in household economy. On that basis, Agribank Thanh Liem Branch will continue to review each customer, closely follow the production and business plans of enterprises and households, promptly propagate and guide customers to borrow capital.

In the context of economic difficulties, the simultaneous reduction of capital mobilization interest rates by commercial banks at all terms is a favorable condition for reducing lending interest rates. Commercial banks are looking for solutions to overcome difficulties related to increasing access to capital and capital absorption for businesses, especially in periods of capital surplus. For businesses, it is very necessary to access capital sources with appropriate interest rates to maintain production and export activities when revenue and profit are reduced due to unstable markets and difficulties in output. Therefore, it is very necessary to have more bridges between banks and businesses to ensure simpler loan procedures and processes, thereby promptly supplementing capital sources for customers in the current period.

According to Mr. Pham Van Tung, Acting Director of the State Bank of Vietnam Ha Nam Branch, in the coming time, the State Bank of Vietnam Ha Nam Branch will direct commercial banks to closely follow the solutions for managing monetary, credit and banking policies of the Government and the State Bank; invest in safe and effective credit, direct credit flows to production sectors, priority sectors and socio-economic development orientations of the province; implement solutions to promote credit growth from the beginning of the year; comply with legal regulations on classification, provisioning and use of risk reserves for loans; synchronously and drastically implement solutions to limit new bad debts; ensure that the debt collection process complies with legal regulations and achieves high efficiency; strictly comply with regulations on interest rates, fees and save operating costs, reduce lending interest rates when mobilization interest rates decrease; promote dissemination and propaganda of mechanisms, policies and information on products and services; ensure safe and effective operations, contributing to the successful implementation of local socio-economic development tasks.

Tran Huu

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