Interest rates hit rock bottom at 2.8%/year, but the rich still enjoy incentives of up to 11%/year

The rich still enjoy 11% interest rate per year

Recently, the Joint Stock Commercial Bank for Foreign Trade of Vietnam ( Vietcombank ) continued to adjust interest rates. Accordingly, the interest rates for 1-month and 2-month terms dropped dramatically to only 2.8%/year. The interest rate for 12-month terms was maintained at a low level of 5.1%/year.

Meanwhile, the general interest rate level in the market for 12-month and 13-month terms is generally below 6%/year. There are very few units maintaining above this level such as National Commercial Joint Stock Bank - NCB (6.4%/year), Construction Bank - CB (6.3%/year), DongA Commercial Joint Stock Bank - DongA Bank (6.1%/year), VietA Commercial Joint Stock Bank - VietA Bank (6.1%/year), Bao Viet Commercial Joint Stock Bank - BaoVietBank (6.1%/year) and Ocean Bank - OceanBank (6.1%/year).

However, in reality, there are still much higher incentives on the market. And those incentives are only for the rich.

Although Vietcombank has lowered the interest rate for 1 and 2-month terms to the "bottom" of 2.8%/year, the market still has an interest rate of 11%/year for 12 and 13-month terms. And this offer is only for the rich. Illustrative photo

Specifically, from October 23, 2023, Vietnam Joint Stock Commercial Bank for Industry and Trade - PVComBank will apply a new interest rate schedule. Accordingly, the highest rate at this bank is only 5.7%/year applied to terms of 12 months or more. However, this is a policy for ordinary customers, while it is different for the rich.

Although PVComBank has continuously changed the listing schedule, the highest rate is still maintained at 11%/year, applied for 12-month and 13-month terms. Only new contracts with a value of VND2,000 billion or more are eligible for this policy.

Previously, Ho Chi Minh City Development Joint Stock Commercial Bank ( HDBank ) ranked second in the list of banks with the highest deposit interest rates at 9.6%/year. Currently, HDBank still maintains this position even though the "peak" rate has dropped sharply to 8.6%/year.

Specifically, at HDBank, the highest interest rate is 8.6%/year, applied to 13-month term deposits with a value of VND300 billion or more. For 12-month term deposits with similar value, the effective interest rate is 8.2%/year.

As mentioned above, at DongA Bank, the highest interest rate is only 6.1%/year (13-month term). With a 12-month contract, the number that customers receive is only 5.85%/year. However, DongA Bank maintains a margin policy. The highest margin that customers enjoy is 0.25%. That means the highest interest rate for a 12-month term is also 6.1%/year.

However, the rich when saving at DongA Bank will enjoy higher incentives.

Accordingly, customers depositing for a term of 13 months or more with interest at the end of the term with a deposit of 200 billion VND or more: the interest rate applied is 8.00%/year for the 365-day/year frame and 7.89%/year for the 360-day/year frame.

Interest rates are expected to continue to fall.

In a newly published report, the KB Securities Vietnam (KBSV) analysis team forecasts that deposit interest rates will remain stable from now until the end of the year, with the average 12-month deposit interest rate of banks around 5.45% (down 2.8% compared to the beginning of the year).

According to KBSV, the delayed easing policies continue to be the biggest driving force for the decline in interest rates. Because the banking system's mobilization is mostly from customer deposits (accounting for about 70%-80%) with terms ranging from 6-12 months, the bank's capital costs in the first half of the year remain high. Therefore, when these deposits mature, the COF of the system will decrease, thereby creating conditions for reducing lending rates.

Credit growth has improved recently but remains low compared to the target of 14% -15%. There is still a lot of room for lending as the LDR of the whole system reached 76.7% as of August, while credit growth is still far from the assigned target, which will be the driving force for reducing lending rates.

Circular 06/2023 allows customers to borrow to restructure debt. Circular 06, which took effect from September 1, has encouraged banks to implement incentive programs to achieve assigned credit targets, thereby reducing lending interest rates.

“However, we believe that the impact of Circular 06 will take time to demonstrate because the story of lending to restructure debt is considered not easy and many procedures come with large penalties for early repayment,” KBSV commented.

However, according to KBSV, there are still factors preventing further declines in deposit interest rates. These are inflationary pressure, exchange rate pressure and liquidity pressure.

Hoang Tu

Source: https://www.congluan.vn/lai-suat-xuong-day-28-nam-nguoi-giau-van-duoc-huong-uu-dai-toi-11-nam-post269684.html