Savings interest rates hit rock bottom, Nghe An expects credit growth at the end of the year

Interest rates are at historic lows

A survey of savings interest rates of banks in Nghe An shows that currently, many banks have sharply reduced interest rates.

In just 3 days (December 11-13), the Joint Stock Commercial Bank for Investment and Development of Vietnam reduced its deposit interest rates twice. On the morning of December 13, BIDV announced a new online deposit interest rate schedule with the highest reduction of up to 0.4%/year. Specifically, the 1-2 month term decreased by 0.4%/year to 2.7%/year; the 3-5 month term decreased by 0.3%/year to 3.1%/year; the 6-11 month term decreased by 4.1%/year. The interest rate for the 12-18 month term is 5%/year, the 24-36 month term remains at 5.3%/year.

Transaction at BIDV Bank, Nghe An branch. Photo: Thu Huyen

Ms. Le Thi Mong Ly - Deputy Director of BIDV Nghe An said: It can be seen that this is a historically low interest rate. The State Bank has a policy of sharply reducing deposit interest rates and lending interest rates to promote production, business and credit growth.

Also in the “Big 4” group, Vietcombank has adjusted its deposit interest rates down for most terms. Currently, the 1-month savings interest rate at Vietcombank is only 2.2%/year. The 6-month savings interest rate at Vietcombank is only 3.5%/year.

For joint stock banks, most banks apply 1-month savings interest rates around 3.2% to 3.5%/year. 3-month savings interest rates are commonly around 3.4%/year to 4%/year. The highest 12-month savings interest rate is 5.7% at OceanBank.

Mr. Nguyen Manh Ha - Director of HDBank Nghe An branch said: HDBank Nghe An branch is currently applying interest rates for 1-5 month terms of 3.15%/year, 6 months is 5.3%/year, 12 months is 5.5%/year. Customers who deposit savings online can enjoy interest rates 0.2% - 0.3% higher than when depositing directly at the counter.

Private joint stock banks are applying higher interest rates than the State Bank. Photo: Thu Huyen

The above savings interest rates are for individual customers' deposits, with interest paid at the end of the term. Depending on the amount of deposit and the type of customer, banks apply their own interest rate policies. In addition, the actual mobilization interest rate may change depending on the capital balance of each bank branch...

It is worth noting that low interest rates, which have been continuously adjusted down, have not caused the flow of savings deposits to decrease, but have increased sharply. According to the State Bank of Vietnam, Nghe An branch, Nghe An is currently leading the North Central region in capital mobilization with results as of October 31, 2023, mobilized capital reaching VND 221,353 billion, an increase of VND 21,562 billion compared to the beginning of the year, equal to 10.8%. This growth is higher than the national average (the whole country is 7.69%); higher than the same period in 2022 (7.6%).

By early November 2023, the total outstanding debt in Nghe An reached VND 277,670 billion, an increase of VND 17,146 billion compared to the beginning of the year, equal to 6.6%, nearly equal to the national average of 6.81%. Outstanding debt is concentrated in some industries such as wholesale, retail, auto and motorbike repair, accounting for 29% of total outstanding debt, an increase of 6.2% compared to the beginning of the year; processing and manufacturing industry accounts for 20% of total outstanding debt, an increase of 10% compared to the beginning of the year; agriculture, forestry and fishery accounts for 16% of total outstanding debt, an increase of 3% compared to the beginning of the year; Activities of hiring jobs in households, production of material products and services for self-consumption of households account for 9%, an increase of 2.87% compared to the beginning of the year; Real estate business activities account for 4% of outstanding debt in the whole area, an increase of 5.3% compared to the beginning of the year.

Graphics: Tran Hai

Year-end lending expectations

The sharp drop in deposit interest rates has created conditions for banks to reduce lending rates and increase outstanding loans. In fact, there is a large gap between credit growth of state-owned commercial banks and private commercial banks.

Ms. Le Thi Mong Ly - Deputy Director of BIDV Nghe An said: "The overall situation of the banking industry is that it is difficult to achieve credit growth of 13-14% this year. Particularly for BIDV Nghe An, the current growth in mobilization and outstanding loans are quite good, with an increase of nearly 9%. The last 2 months of the year will certainly exceed this number."

Meanwhile, credit growth in general at joint stock banks is very low. At VIB International Bank Vinh branch, Mr. Nguyen Xuan Thong - Director of the North Central region said: Since the beginning of the year, the situation of deposit mobilization has basically been maintained well, reaching 5,000 billion VND to this point, up 20% compared to the beginning of the year. In the context of economic difficulties, investment channels are difficult, so people still have to deposit money in banks. Meanwhile, lending is difficult, generally gloomy, we have excess capital.

Although deposit interest rates have continuously fluctuated downward, bank deposits have increased sharply. Photo: Thu Huyen

If last year banks competed to attract money and lend well; only VIB International Bank Vinh branch had credit growth of over 10%, this year is generally very difficult. In the first 10 months of the year, this bank had negative credit growth, but in November the situation improved, reaching 1-2%, mainly individual customers borrowing for consumption.

According to banks, the lending situation is getting better towards the end of the year, and outstanding loan growth is forecast to be better, but not as good as last year. According to the State Bank of Vietnam, Nghe An branch, it is estimated that by the end of this year, mobilized capital in the area is estimated to reach VND 225,764 billion, an increase of VND 25,973 billion compared to the beginning of the year, equal to 13%, the same period in 2022 (13.9%). The total outstanding loans of credit institutions in the area are estimated to reach VND 295,628 billion, an increase of VND 24,132 billion compared to the beginning of the year, equal to 8.8% (the growth rate in 2022 is 11.9%).

The reduction in deposit interest rates is expected to create favorable conditions for businesses to borrow capital for production and business at the end of the year. Photo: Thu Huyen

The leader of the State Bank of Nghe An Branch said: In the coming time, the Branch will continue to direct and effectively implement key tasks and solutions under the direction of the Government, the Governor and the Provincial People's Committee. Strictly implement the direction of the State Bank of Nghe An Branch on credit and interest rates, grasp and monitor the reduction of lending interest rates of units in 2024; continue to implement the contents related to Resolution 11/NQ-CP dated January 30, 2022 of the Government on the Socio-economic Recovery and Development Program, including the program to support 2% interest rate from the State budget; deploy credit packages to fully and promptly meet the capital needs for production and business, serving the living needs and legitimate consumption of people and businesses, striving to increase credit growth while controlling credit quality.

The State Bank of Vietnam, Nghe An Branch, also continues to implement solutions to support people and businesses, focusing on implementing the policy of restructuring debt repayment terms and maintaining debt groups in accordance with the provisions of Circular 02/2023/TT-NHNN to create favorable conditions to support businesses and people, promote the Business Banking Connection Program. Linking the growth of banking activities with the goals and tasks of socio-economic development of the province...

Outstanding debt of some credit policy programs estimated as of December 31, 2023 in Nghe An:

Loans for agriculture and rural areas are estimated at VND131,359 billion, up 5.2% compared to the beginning of the year, accounting for 44.4% of outstanding loans in the whole area. Export loans are estimated at VND3,450 billion, up 10.4% compared to the beginning of the year. Outstanding loans for high-tech agriculture are estimated at VND20,235 billion, up 0.6% compared to the beginning of the year, accounting for 7% of outstanding loans in the whole area. Housing support loans under Resolution 02/NQ-CP dated January 7, 2013 of the Government are still VND112 billion. Preferential loans to implement social housing policies under Decree 100/ND-CP and Circular 25/2015/TT-NHNN are VND444.14 billion with 1,239 customers. Shipbuilding loans under Decree 67/2014/ND-CP are estimated at 142 billion VND .

Lending to large provincial projects (investment capital from 100 billion VND or more) that banks are sponsoring: Currently, there are 40 large provincial projects being sponsored by 21 local banks, with outstanding loans of 12,203 billion VND, total committed funding of more than 32,240 billion VND; 28,377 billion VND has been disbursed for 61 projects .

Source: https://baonghean.vn/lai-suat-tiet-kiem-xuong-day-nghe-an-ky-vong-tang-truong-tin-dung-cuoi-nam-post281563.html