Strong credit growth pushes deposit interest rates up

Although the deposit interest rate level has not really been active, the rate of interest rate reduction by banks is slowing down, and it is forecasted that many banks will adjust deposit interest rates up by the end of the year, when the demand for loans is expected to increase sharply.

Has the room for reducing deposit interest rates almost run out?

In April and May, a number of small and medium-sized banks were forced to increase their deposit interest rates due to signs of recovery in credit demand. However, deposit interest rates remained low, so short-term lending interest rates have not changed much, indicating that the possibility of further reductions in deposit interest rates is not much left.

According to information from the State Bank of Vietnam (SBV) on interest rate developments in April 2025, the average VND deposit interest rate at domestic commercial banks fluctuates from 0.1-0.2%/year for demand deposits and deposits with terms of less than 1 month; from 3.2-4.0%/year for deposits with terms of 1 month to less than 6 months.

Interest rates for deposits with terms from 6 to 12 months remain at around 4.5-5.5%/year; for terms over 12 to 24 months at 4.8-6.0%/year; and for terms over 24 months at 6.9-7.1%/year.

Compared to March, deposit interest rates remained almost stable, only increasing slightly by about 0.1%/year for 6-12 month terms. This clearly reflects the limited room for banks to reduce deposit interest rates.

Experts say that the average interest rate continues to decrease, but the rate has slowed down, and the number of banks increasing interest rates is increasing.

Specifically, in May, 4 banks reduced their deposit interest rates, including MB, GPBank, Eximbank and VPBank (of which VPBank, MB and Eximbank reduced their interest rates twice). In contrast, Techcombank, Bac A Bank and Eximbank adjusted their interest rates up, with Eximbank increasing them 3 times.

Most recently, on May 22, Eximbank raised its online deposit interest rate for short-term deposits from 1-5 months by 0.2%/year. Accordingly, the 1-2 month term is applied at 4.3%/year, the 3-5 month term is 4.5%/year. Longer terms remain the same: 6-9 months 4.9%/year; 12-15 months 5.1%/year; 18-36 months 5.6%/year.

Not only mobilizing online, Eximbank also increased the interest rate for the product “Prosperity Savings 50+” for customers over 50 years old depositing at the counter, increasing by 0.1%/year for 1-2 month term and 0.2%/year for 3-5 month term, respectively to 4.1% and 4.3%/year. The savings product “Combo Casa” also increased the interest rate by 0.1-0.2%/year for 1-5 month terms.

Previously, in April, the number of banks reducing deposit interest rates narrowed to 10 units, compared to more than 20 units in March. However, some small and medium-sized private banks increased deposit interest rates to meet the positive recovery in credit demand.

Capital demand increased sharply

According to experts, input interest rates are expected to gradually increase towards the end of 2025, due to expectations that the economy will continue to grow positively and credit will reach, or even exceed, the set target of 16%.

Ms. Dinh Ha Anh, an expert from MB Securities Company (MBS), said: “Based on these factors, the 12-month deposit interest rate of major commercial banks is likely to fluctuate between 5.5 - 6%/year.”

Data from the State Bank of Vietnam (SBV) shows that the total outstanding credit balance of the entire system as of April 15, 2025 reached VND 16.23 trillion, an increase of 3.95% compared to the end of 2024, equivalent to an increase of about VND 640,000 billion in just over 3 months.

On this basis, MBS experts forecast that input interest rates will remain at 5.5-6% by the end of the year, while credit growth this year could reach 17-18%, driven by the strong recovery of the manufacturing sector, domestic consumption and accelerated disbursement of public investment capital.

Recently, capital flows into the economy have been boosted by lower deposit interest rates, supporting lower lending rates. The State Bank of Vietnam said that in April 2025, the average lending interest rate of commercial banks for new loans and existing outstanding loans fluctuated between 6.6-8.9%/year, a slight decrease compared to 6.6-9.0%/year in March.

Specifically, the short-term lending interest rate in VND for priority sectors remained at around 3.9%/year, lower than the ceiling of 4%/year set by the State Bank of Vietnam and equivalent to the previous month's report. The average USD lending interest rate of domestic banks also remained at 4.2-5.0%/year.

However, financial and banking expert Dr. Nguyen Tri Hieu said that there is not much room left to reduce interest rates further. In the current context, banks are forced to consider the goal of economic growth and exchange rate stability.

To achieve the credit growth target of about 16%, thereby supporting GDP growth of about 8%, maintaining low interest rates is an important tool to stimulate loan demand and increase cash flow into the real economy, although not the only factor.

Pressure from the US tax policy on Vietnamese exports is affecting the supply of foreign currency due to a decrease in export turnover, while the demand for foreign currency remains high, putting pressure on the exchange rate and pushing the USD up against the VND. This also limits the ability to continue lowering lending and deposit interest rates.

According to analysts, in the current recovery period, banks not only play the role of providing capital but also act as partners to help the economy overcome difficulties.

However, the increase in deposit interest rates does not mean that lending interest rates will increase immediately and simultaneously, because commercial banks still have to balance credit risks, bad debt provisioning pressure, profit margins and the ability to reduce interest rates.

Mr. Nguyen Quang Huy, CEO of the Faculty of Finance and Banking, Nguyen Trai University, forecasts that in the last 6 months of 2025, the lending interest rate level may continue to decrease slightly, but the developments will be flexible and there will be choices for each customer group and industry.

Source: https://baodaknong.vn/tin-dung-tang-manh-day-lai-suat-huy-dong-leo-thang-253759.html