Savings interest rates continue to fall

Wave of interest rate cuts

This time last year, savings and lending interest rates were skyrocketing, this year it is the complete opposite. Since the beginning of January, about 30 banks have reduced their deposit interest rates to record lows. Agribank reduced interest rates for the second time in the past month, the new reduction is about 0.2%/year, fluctuating between 1.8 - 5.3%/year. Recently, TPBank reduced deposit interest rates by another 0.2%/year, down to 2.8 - 5.3%/year; MB reduced interest rates from 0.2 - 0.3%/year, down to 2.5 - 6%/year...

Some banks have adjusted their savings interest rates down twice in January. For example, Eximbank reduced interest rates by 0.1 - 0.3%/year. The 1-month deposit interest rate is now 3.4%/year, 3-month deposit is now 3.7%, 6-month deposit is now 4.6%, 12-month deposit is now 5.1%/year... This is the second reduction by this bank in January. Similarly, VietBank also reduced its savings interest rates for the second time, from 0.1 - 0.2%/year; 1-month term interest rate is 3.5%/year, 3-month term is 3.7%, 6-11 months is 5%, 12 months is 5.3%... Techcombank also reduced the term of 1-2 months, this bank's interest rate is 2.7%/year, 3-month term is 3.3%, 6-month term is 3.8%, 9-month term is 3.85%, 12-month term or more is 4.9%...

Lãi suất tiết kiệm vẫn tụt không phanh- Ảnh 1. — Banks continue to cut interest rates to low levels

Banks that were in the race to increase interest rates before have now also reduced their interest rates to low levels. For example, LPBank mobilizes interest rates for terms from 1 to 24 months from 2 - 5.3%/year; SHB has interest rates from 3 - 5.5%/year; NAM A BANK has interest rates from 3.1 - 5.9%/year...

It can be seen that the interest rate for deposits under 6 months of banks has not reached the ceiling of 4.75%/year. The gap between short-term and long-term interest rates has narrowed, to around 2-3% instead of 5-6% as before. For terms from 12 months onwards, banks also only mobilize around 5-6%/year. However, the situation of banks with higher short-term interest rates than long-term ones still occurs. For example, ABBANK has a 6-month interest rate of 4.8%/year, but from 9 months onwards it is only 4.2%/year. Or MSB has a 3-month interest rate of 3.25%/year, but from 6-9 months it is 3.1%/year, from 12 months onwards it is 3.5%/year. This is a bank whose interest rate table does not exceed 4%/year.

In the interbank market, transaction interest rates between banks also dropped to a record low. According to the latest announcement from the State Bank of Vietnam (SBV), the average interbank interest rate on January 24 for overnight terms dropped to 0.12%/year, 1 week to 0.26%/year, 2 weeks to 0.51%/year, 1 month to 0.93%/year, 3 months to 3.02%/year, 6 months to 4.02%/year. Despite low interest rates, transaction turnover always remained high, such as overnight up to VND241,049 billion, 1 week to VND14,985 billion, 2 weeks to VND1,460 billion... This is a rather strange development compared to previous years. Normally in January, interest rates in the interbank market would be high. At this time last year, transaction interest rates of banks ranged from 6 - 11.44%/year. So the current interest rate is about 6%/year lower than 1 year ago.

Borrow money... get rewarded

Associate Professor, Dr. Nguyen Huu Huan (Ho Chi Minh City University of Economics) commented that the decline in savings interest rates shows that banks still have excess capital and lending is difficult. Saving interest rates will continue to decrease slightly and hover around the bottom. "No one thought that savings interest rates would hit rock bottom one year later. People's psychology of not daring to spend has led to an increase in savings rates, while consumption and investment rates have decreased, so savings are greater than investment, leading to stagnant capital. The psychological problem is affecting the market. When economic expectations are not very bright, people will be cautious and spend sparingly for upcoming difficulties. This further weakens demand and creates a spiral of declining aggregate demand," Mr. Huan analyzed.

In contrast to the situation of having to buy insurance to get a loan in previous years, to promote credit growth, some banks are now launching different programs. For example, ACB is implementing the program "Tet with ACB: Gifts that can't be stopped" from January 15 to March 31 for loan customers with a 100% winning rate. The prizes include a Mercedes car, PNJ gold worth 3.4 taels, an iPhone 15 ProMax phone and many other valuable gifts. BIDV offers home loans with interest rates from 6.5 - 8.5%/year for 6 or 24 months.

In addition, BIDV offers two outstanding privilege packages "Dream Home" and "Premier Home" to customers who pay their salaries through BIDV accounts or individual customers who are business owners using BIDV accounts and BIDV's premium individual customers, with a series of unprecedented attractive incentives. Specifically, 50% reduction in early repayment fees, gift of a beautiful account number worth 50 million VND... SHB offers a series of outstanding incentives and attractive gifts when saving and borrowing capital at the bank.

Mr. Nguyen Huu Huan commented: In the past, when credit limits were difficult, customers needed banks, so banks "sold beer with peanuts", but now banks need customers so they also have to "sell beer with peanuts". If we want the decline in savings interest rates to stop, the economy's demand for loans must increase. Banks lend to mobilize capital. And this depends on the economic situation of countries that Vietnam exports goods to, such as the US. The US economy grows and recovers, Vietnamese businesses receive more orders, then there is a need for loans for production and business.

Mr. James Cheo, Head of Investment for Southeast Asia and India, HSBC Global Private Banking, emphasized that Vietnam's economy will grow by 6% in 2024. In particular, the strength of the Vietnamese economy in 2024 will come from the combination of consumer spending and investment. Strong foreign direct investment flows are likely to continue in 2024, supporting the manufacturing industry. The new global trade cycle will boost Vietnam's exports. Moreover, Vietnam is likely to witness a gradual increase in international tourism. Overall, according to him, Vietnam's economy is expected to grow GDP at 6% in 2024, faster than in 2023.

Inflation is relatively stable but there may be risks of an increase due to higher-than-expected energy or food prices. The Monetary Authority of Vietnam will be cautious and keep the operating interest rate unchanged this year.

Mr. James Cheo , Head of Investments, Southeast Asia and India, HSBC Global Private Banking

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