According to a report by the Lao Dong newspaper, deposit interest rates at commercial banks continued to decrease by approximately 0.2-0.5% per year in January 2024, mainly for terms under 12 months. Specifically, four state-owned commercial banks reduced their short-term deposit interest rates by 0.2-0.3%. Most private joint-stock commercial banks adjusted their rates downwards by 0.1-0.5% per year. However, some banks, such as VPB, SSB, and ABB, slightly increased their rates by 0.1-0.2% per year, primarily due to the already significant rate reductions in the previous period.
The prevailing interest rate for 12-month deposits is 4.6 - 5.2% per year. The interest rate spread between state-owned commercial banks and joint-stock commercial banks has narrowed from 2 - 3% per year in the 2021-2023 period to less than 1% per year for short-term deposits.
The sharp decline in deposit interest rates recently has helped lower lending interest rates compared to the end of 2023. Currently, most banks apply two interest rate levels: preferential rates for short-term loans (3-12 months) and rates after the preferential period. The adjustment margin for bank lending interest rates between the preferential and post-preferential periods is commonly between 2-3.8%.
According to the survey, preferential interest rates for commercial housing loans at banks in March 2024 ranged from 5-14.05% per year. After the preferential period, the floating interest rate will be around 8-13% per year.
Nevertheless, credit growth as of the end of January 2024 decreased compared to the end of 2023. According to Vietcombank's leadership, by the end of January 2024, the bank's credit had decreased by approximately VND 30,000 billion compared to the end of 2023, due to the declining trend of consumer real estate loans from 2023 and continuing into January 2024 amidst a difficult economic situation, reduced people's incomes, a sluggish real estate market, and a shortage of supply.
Regarding wholesale customers, difficulties mainly focus on legal issues related to land, slowing down the progress of new projects and affecting the disbursement of medium- and long-term loans. In addition, many specific credit segments are seasonal at the end of the year, such as outstanding loans for international payments, which typically increase at the end of the year and decrease when customers repay at the beginning of the following year; export businesses often have payment collection periods at the end of the year; and FDI businesses often repay short-term loans to finalize accounts…
Dr. Nguyen Duy Phuong, Director of Financial Investment at DG Capital, believes that the main reason for the decline in credit is the lack of demand; however, high interest rates also deter businesses from making medium- and long-term investments.
Interest rates on medium and long-term loans at state-owned commercial banks are currently relatively low, but they remain quite high at joint-stock commercial banks, with lending rates ranging from 9-12% per year. This is due to the relatively high cost of capital for these banks (long-term deposit interest rates at private joint-stock banks at the beginning of 2023 fluctuated between 9-10% per year). However, over time, the source of high-interest funding will gradually decrease, creating an opportunity for banks to gradually reduce lending rates.
Banks may not further reduce deposit interest rates, but they can lower lending rates. However, in addition to the efforts of the banking system, there needs to be active involvement from competent authorities at all levels, from central to local, in resolving legal issues for investment projects, improving the business environment, simplifying investment processes and administrative procedures, and facilitating business operations for people and enterprises, said Dr. Nguyen Duy Phuong.
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