Many investment channels are in a "frozen" state.
On the first day of December 2023, the interest rate of regular VND savings deposits at bank counters continued to decrease by 0.1-1.35%/year, depending on the term compared to the same period in November. The highest mobilization interest rate for a 12-month term is only 5.7%/year.
Surveys at the Bank for Agriculture and Rural Development of Vietnam (Agribank), Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), Joint Stock Commercial Bank for Industry and Trade of Vietnam (VietinBank), as well as a group of joint stock commercial banks such as: Vietnam Prosperity (VPBank), Vietnam Technological and Commercial Joint Stock Bank (Techcombank), Military (MB), Asia Commercial Joint Stock Bank (ACB), Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Ho Chi Minh City Development Joint Stock Bank (HDBank), Saigon - Hanoi Joint Stock Bank ( SHB ) ... on the first day of December showed that mobilization interest rates (at terms of 6, 9, 12 and 24 months) continued to be adjusted down sharply with a decrease of 0.1-1.35%/year.
In the group of state-owned commercial banks, at the end of November, Vietcombank reduced its deposit interest rates for the 11th time this month, to the lowest level in the system. Compared to the beginning of November, Vietcombank's savings interest rates have decreased by 0.3-0.4%/year. Specifically, the bank's savings interest rates for 6- and 9-month terms decreased by 0.4% to 3.7%/year; terms of 12 months or more were adjusted down by 0.3%/year to 4.8%/year.
In the joint stock commercial group, the trend of interest rate reduction is still maintained and occurs widely. Among the surveyed banks, Sacombank is the bank that has reduced interest rates the most. Accordingly, the interest rate table on the first day of December 2023, the savings deposit interest rate at this bank has been adjusted down by 0.6-1.35%/year. MB also adjusted the interest rate down by 0.1-0.3%/year, but the highest deposit interest rate of this bank is at 6.4%/year for a 24-month term. This is also the highest savings deposit interest rate on the market...
Experts from VDSC Securities Company commented that in November, commercial banks continued to slightly adjust deposit interest rates with adjustments ranging from 0.1 to 0.3 percentage points.
It is worth mentioning that, at this time in previous years, when interest rates decreased, the amount of deposits also decreased because of competition with many other attractive mobilization channels such as real estate, stocks, gold, foreign currency, etc. However, in the context of many investment channels falling into a "frozen" state or having difficulty making profits as it is now, savings deposits are still chosen by investors as a safe place. Therefore, instead of decreasing the amount of deposits, this number reached a record level.
According to the latest statistics of the State Bank, deposits of residents and economic organizations in the first 9 months of 2023 reached approximately 12.7 million billion VND, up 11.0% over the same period and up 5.9% compared to the end of 2022. In particular, the growth of deposits of economic organizations had a significant breakthrough in September, up 7.7% over the same period and up 4.7% compared to the end of last year. The growth of deposits of the residential sector continued to improve to 14.4% and 9.9% compared to the above times.
Conditions for further lowering lending rates
The world economy is unstable, while the domestic real estate market has not yet recovered, the stock market has not really recovered... are the reasons why savings deposits are the most favored channel at present. Therefore, even when savings interest rates continuously break records with new "bottoms", it does not affect the choice of investors.
Economist, Dr. Can Van Luc, member of the National Monetary and Financial Advisory Council, shared that statistics from the State Bank on deposits show that savings deposits are still increasing. Although interest rates have decreased, they are still relatively good at 5%/year for a 12-month term.
On the other hand, deposit interest rates have been continuously decreasing because commercial banks have too much money, while the amount of capital lent is low, and credit growth is low compared to many years ago. The latest data from the State Bank shows that over the past 11 months, economic growth has been difficult, the economy's capital absorption and credit demand are still weak. As of November 22, credit growth of the entire system has only reached 8.21%, lower than the target. The State Bank representative said that the credit growth of the credit institution system is uneven. Therefore, to reduce the burden caused by too much excess capital, banks are forced to reduce deposit interest rates.
Continuing to reduce deposit interest rates is also considered a condition for banks to reduce lending interest rates, thereby stimulating credit growth at the end of the year and during the 2024 Lunar New Year. At the end of November, the State Bank sent a document to credit institutions announcing the additional credit growth for credit institutions publicly and transparently according to specific principles and criteria.
Accordingly, credit institutions with outstanding credit balances reaching 80% of the announced target will be proactively supplemented with additional limits based on the 2022 ranking, while giving priority to credit institutions that focus on credit in priority areas of the Government and have lowered lending interest rates to low levels in the recent past.
Deputy Governor of the State Bank Pham Thanh Ha:
Flexible management of market operations
In conducting monetary policy, "trial and error" are not allowed. Therefore, implementing the Government's direction, the State Bank also flexibly operates open market operations to stabilize the monetary market. In particular, to reduce pressure on exchange rates, the State Bank has reactivated the issuance of treasury bills after a temporary suspension since early March 2023.
It is necessary to solve the difficult problem of reducing lending interest rates while increasing credit quality. Therefore, the State Bank continues to operate open market operations flexibly and proactively, ready to support liquidity for the credit institution system. At the same time, it operates interest rates in accordance with macroeconomic balance, inflation and monetary policy targets; encourages credit institutions to reduce costs and reduce lending interest rates.
In addition, the State Bank closely monitors developments in the real estate market, corporate bonds, and real estate credit to have solutions that both ensure the safety of the banking system and contribute to solving difficulties, removing bottlenecks, and promoting economic growth.
Head of Agribank Credit Policy Department Nguyen Van Bach:
Capital flow into the economy remains a difficult problem
The Vietnam Bank for Agriculture and Rural Development (Agribank) is determined to always accompany customers. Since the beginning of the year, Agribank has reduced lending interest rates many times. Agribank has directly reduced interest rates for VND440,000 billion of existing loans, with a total interest reduction of about VND850 billion for 1.7 million customers. By October 31, the bank had provided interest rate support for nearly 10,000 disbursements, with lending turnover reaching over VND14,000 billion...
Agribank has continuously implemented 8 preferential interest rate credit programs targeting customers who are enterprises operating in production and business in priority areas and personal consumption with a scale of nearly 200,000 billion VND, with interest rates 2 to 3% lower per year than normal lending rates. The bank has also restructured the repayment period and maintained the debt group for customers facing difficulties worth more than 34,000 billion VND...
Lending interest rates have now dropped to pre-Covid-19 levels, the lowest ever. However, getting capital to flow into the economy is still a problem that the banking industry is trying to find a solution to.
Economist, Dr. Vu Dinh Anh:
Increase the ability to absorb capital for businesses
Although the current lending interest rates on the market are relatively reasonable, the most important thing is to increase the ability to absorb capital for businesses from now until the end of 2023. There are many things to do. First, businesses and customers must restore production, business activities and consumption capacity. Second, consider debts that are due but have not been paid due to the difficulties of businesses, and reduce the conditions for businesses to access loans, especially for small and medium-sized enterprises.
Banks need to review their customer portfolios, both current and potential, to create the best conditions for customers that they assess to meet the conditions, although there are some problems with the processes and procedures, to be able to disburse loans. Next is to handle issues related to credit history.
Notably, macro policies need to stimulate recovery for businesses, with synchronous policies to help small and medium-sized enterprises have better access to credit capital.
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