State Bank net withdrawal, interest rates inter...

Interbank interest rates hit 13-month low, signaling abundant liquidity

In a newly released currency market report, MB Securities (MBS) said that amid increasing exchange rate pressure, the State Bank of Vietnam (SBV) returned to net liquidity withdrawal in April with an estimated value of nearly VND22.2 trillion. Specifically, the SBV injected about VND220.3 trillion through the OMO channel, with an interest rate of 4% and a term of 7 to 91 days. However, the total amount of capital maturing in the month amounted to more than VND242.4 trillion.

State Bank net absorption of interbank interest rates still hits 13-month low — Interbank interest rate developments of main terms (Unit: %)

Despite the net withdrawal moves of the Operator, overnight interbank interest rates, after remaining around the 4% - 4.4% threshold in the first half of April, fell sharply to a 13-month low of 2.2% on April 25 - showing excess liquidity in the system.

Accordingly, it has significantly affected the VND-USD interest rate gap and exchange rate pressure. If from the beginning of the year to the first half of April, the USD overnight interest rate was 0.2% - 1.2% higher than the VND, then near the end of the month, this difference increased sharply to 2.1% / year - the highest level since the beginning of the year. By the end of the month, the overnight interest rate was at 3.8%, while interest rates for terms from 1 week to 1 month fluctuated around 3.9% - 4.1%.

Deposit interest rates continue to decline but have slowed down

After a series of banks reduced interest rates in the past two months, the average deposit interest rate continued to maintain a downward trend but has slowed down. In April, nearly 10 banks reduced interest rates by 0.1% - 0.5%/year for many terms.

On the other hand, the market has also recorded several small and medium-sized private banks increasing input interest rates in the context of credit demand showing signs of positive recovery.

According to the State Bank of Vietnam, by the end of the first quarter, credit growth of the entire system reached 3.93% - nearly 3 times higher than the same period last year. However, in general, the number of banks reducing interest rates is still dominant. By the end of April, the average 12-month term interest rate of the group of commercial banks had decreased by 12 basis points to 4.93%, while the interest rate of the group of state-owned commercial banks remained at 4.7%.

Input interest rates are forecast to fluctuate at 5.5% - 6% by the end of 2025.

Although deposit interest rates have been on a downward trend recently, MBS believes that input interest rates will gradually increase towards the end of the year with the expectation that the economy will grow positively and credit growth will reach or even exceed the set target of 16%. As of the end of March, outstanding credit of the whole system increased by 3.93% compared to the end of 2024 - 2.5 times higher than the increase of 1.42% in Q3/2024, showing that capital demand is gradually recovering.

Experts at MBS also forecast that credit growth this year will reach 17-18%, driven by: the recovery of domestic production and consumption, and the acceleration of public investment disbursement. Based on the above factors, we forecast that 12-month deposit interest rates of major commercial banks will fluctuate around 5.5% - 6% in 2025.

Source: https://baodaknong.vn/ngan-hang-nha-nuoc-hut-rong-lai-suat-lien-ngan-hang-van-cham-day-13-thang-251739.html