In June 2024, the trend of increasing deposit interest rates continued when a series of commercial banks announced new interest rate schedules, increasing in many terms. Depositors were more excited while businesses were worried that lending interest rates would increase in the context of economic difficulties.
Simultaneously increase input interest rates
According to a survey by a reporter from the Lao Dong Newspaper, from the beginning of June 2024 until now, the wave of increasing savings interest rates has tended to spread. In fact, about 20 banks have increased deposit interest rates, of which some small-scale banks have adjusted interest rates 2-3 times with an increase of about 0.1 - 0.5 points. Notably, the market has recorded many banks paying interest rates of over 7.5%/year for a term of 18 months or more, however, to enjoy this high interest rate, customers must deposit hundreds of billions of dong.
The market also has a savings interest rate of 6%/year when customers deposit for 24 - 36 months. Some banks issue certificates of deposit with high interest rates to attract idle money from people.
For example, the Vietnam Joint Stock Commercial Bank for Industry and Trade ( Vietinbank ) has just launched a deposit certificate called FLEXI with quite attractive profits. Vietinbank did not announce details about interest rates, but according to the advice of this bank's staff, buyers of deposit certificates will have higher profits than savings deposits. For example, if a customer buys a 2 billion VND FLEXI deposit certificate, after 32 days they will have a profit of more than 5.2 million VND (equivalent to an interest rate of 3%/year); after 97 days they will have a profit of more than 17 million VND (interest rate of 3.2%/year). Meanwhile, the deposit interest rate for individual customers at Vietinbank for a term of 1-2 months is only 1.7%/year; for a term of 6 months to less than 12 months is 3%/year.
Vietnam Public Bank (PVcomBank) also issued the second batch of deposit certificates in 2024 for individual customers, with a fixed interest rate of up to 8%/year, much higher than the highest online savings interest rate of this bank of 5.5%/year.
Speaking to reporters, a senior Vietinbank leader said that capital mobilization by banks is still abundant, but mainly short-term deposits. Meanwhile, the Government wants credit to grow strongly in the last 6 months of the year to meet capital needs for the economy. In order for outstanding loans to increase, banks need to provide medium and long-term loans. Accordingly, many banks have increased capital mobilization interest rates, including issuing deposit certificates to encourage people to convert short-term savings to long-term ones.
Deposit interest rates have edged up amid a gradual improvement in credit growth month by month. The latest figures released by the State Bank of Vietnam show that credit growth reached 3.79% by mid-June 2024. The credit volume provided by banks to the economy in the first 6 months of the year was higher than that of the same period 3 years ago.
In Ho Chi Minh City, credit in the area by the end of May 2024 reached VND3.61 trillion, up 1.93% compared to the end of 2023. Mr. Nguyen Duc Lenh, Deputy Director of the State Bank of Vietnam, Ho Chi Minh City Branch, said that although the growth rate is not high, credit has maintained a positive growth rate continuously from February to now. The trend is that each month is higher than the previous month. This trend will continue when economic activities usually operate and grow well in the second half of the year. Therefore, banks also increase capital mobilization to meet credit growth needs.
Deposit interest rates have increased, but lending interest rates are not expected to increase accordingly. Photo: BINH AN
No worries about interest rates increasing
MBS Securities Company believes that net interest income (NIM) will continue to be under downward pressure as lending interest rates are forecast to fall further in the coming time. This development comes in the context of a slight increase in deposit interest rates at most banks.
Forecasting the upcoming interest rate trend, the WiResearch (Wigroup) team of experts said that the mobilization interest rates at large commercial banks and some other commercial banks for short terms increased slightly by 0.2 - 0.5 percentage points in May compared to the previous month. There was no change in interest rates at state-owned banks. Therefore, the increase in interest rates shows that there is a demand for capital but only in the short term, occurring locally at some banks. The general deposit interest rate level at all commercial banks continues to remain low, showing that the liquidity of the system is still stable. Mobilization interest rates will remain at the current level before credit demand increases further in the second half of the year.
Dr. Can Van Luc, member of the National Financial and Monetary Policy Advisory Council, commented that deposit interest rates may increase slightly in the third or fourth quarter of 2024, but lending interest rates will try to stay at the current level. Deposit interest rates have increased slightly due to some more attractive investment channels, creating pressure to increase deposit interest rates, but not much. In the coming time, deposit interest rates will remain the same or increase slightly during some times when seasonal credit demand increases in the second half of the year.
"Regarding lending interest rates, the spirit of the Prime Minister and the State Bank of Vietnam for the banking industry is to strive for stability and further reduction of 1-2 percentage points through cost reduction policies and application of information technology. This development shows that banks' NIM will continue to narrow, last year it narrowed to 3.5%, this year it will be 3% or lower" - Mr. Luc said.
From the perspective of enterprises, Mr. Nguyen Xuan Hien, representative of Vietnam Social Housing Company Limited, is concerned about the risk of loan interest rates increasing? His company has a long-term loan with an interest rate of 10.5%/year. Recently, the mobilization interest rate has increased again, so it is likely that in the near future, loan interest rates will not be able to remain stable.
Regarding this issue, Vietinbank leaders said that banks are currently trying to save on operating costs and have proactively reduced profits, so output interest rates may not increase along with deposit interest rates. Because if lending rates increase, customers will not be able to access capital, and banks will not achieve their credit growth targets.
Reduce interest rates, debt restructuring to support businesses
In Resolution No. 82/NQ-CP of the regular Government meeting in May 2024, the Government assigned the State Bank to manage credit growth in line with macroeconomic developments, inflation, meet capital needs for the economy, support growth promotion... The State Bank directed commercial banks to effectively implement solutions to increase access to credit for people and businesses, direct credit to production - business, priority areas and growth drivers. Direct and encourage credit institutions to reduce costs, cut administrative procedures, promote digital transformation to strive to reduce lending interest rates by 1 - 2 percentage points.
Among the solutions to support businesses, the State Bank has just issued Circular No. 06/2024/TT-NHNN amending and supplementing a number of articles of Circular No. 02/2023/TT-NHNN regulating the restructuring of debt repayment terms and maintaining debt groups to support customers in difficulty. According to the State Bank, extending Circular 02 until the end of this year (instead of expiring on June 30) will continue to help remove difficulties for businesses and people, help reduce debt repayment pressure, create conditions for capital turnover and access to new loans. From there, there will be more resources for investment, production and business recovery, serving life and consumption, in line with the policies of the National Assembly and the Government.
Keep operating interest rates unchanged
In its economic update report, UOB Global Economics and Market Research expects the State Bank of Vietnam to keep its policy interest rate unchanged for the remainder of this year. This assessment is based on the management agency balancing factors such as stable domestic economic recovery, moderate inflationary pressure and the depreciation of the VND against the USD.
Meanwhile, in the latest economic update report on Vietnam, experts from Standard Chartered Bank forecast that the State Bank may increase the refinancing interest rate by 0.5 percentage points in the fourth quarter of 2024 in the context of rising inflation. The exchange rate factor may push the State Bank to increase interest rates in the last quarter of the year or earlier, but it is also necessary to monitor the interest rate management of the US Federal Reserve (FED).
Source: https://nld.com.vn/lai-suat-tien-gui-tang-mung-nhieu-hon-lo-196240625220343794.htm
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