The trend of increasing deposit interest rates: What will the lending interest rates be like from now until the end of the year?

According to experts, deposit interest rates will increase mainly for terms with few depositors such as 4-5-7-8-9-10-11 months, while key terms will not be adjusted much, so lending interest rates will not fluctuate much.

The trend of increasing deposit interest rates is widespread but still at a reasonable level. (Photo: Vietnam+)

System liquidity is still abundant, credit demand is weak, but the wave of increasing deposit interest rates is still "smoldering" at many commercial banks. However, experts assess that this increase will not affect lending interest rates from now until the end of the year.

Deposit interest rates are strongly differentiated.

On July 22, BIDV Bank adjusted to increase online deposit interest rates but kept the same direct savings interest rates at the counter.

Accordingly, customers who deposit money online for a term of 6-11 months will receive an additional 0.3% to 3.3%/year. Meanwhile, customers who deposit money for a term of 24-36 months will receive an additional 0.2% compared to the interest rate for continued deposits at the counter, at 4.9%/year.

With the above interest rate adjustment, BIDV continues to be the bank paying the second highest interest rate in the Big4 group. Currently, VietinBank is still the bank paying the highest interest rate of up to 5%/year for online deposits, while Vietcombank and Agribank list the highest interest rate at 4.7%/year. For the 12-month term, whether online or offline, all 4 major banks have kept the same rate at 4.6%-4.7%/year, unchanged in the past 3 months.

Thus, after falling to a historic low, deposit interest rates have started to increase again since the end of March and have been widespread in April, May and June. And at the beginning of July, 15 banks adjusted deposit interest rates up, including: VietBank, MB, BVBank, KienLong Bank, NCB, Eximbank, SeABank, VIB, BaoViet Bank, Saigonbank, VPBank, PVCombank, PGBank, Sacombank and BIDV.

In a newly published study, UOB Vietnam Bank said that from the beginning of the second quarter of this year, the VND interest rate level began to increase and by mid-year, the VND mobilization interest rate from banks had increased by about 0.5% -1%/year for different terms.

According to Mr. Dinh Duc Quang, Director of Currency Trading Division, UOB Vietnam Bank, commercial interest rates (mobilized from residents and businesses, interbank market...) are being adjusted to better match the supply and demand of capital in the market, in correlation with USD interest rates in the world market, and with investment returns compared to other investment channels such as stocks, real estate, precious metals...

Dr. Le Xuan Nghia - economic expert said that the slight increase in savings interest rates in the market as in the past time is reasonable, helping to balance the interests of all parties and retain depositors. For the banking system, the most important thing now is to keep the operating interest rate stable and the lending interest rate low for the economy to recover.

In fact, although deposit interest rates have bottomed out, they are still not attractive to depositors. According to data just released by the State Bank, as of the end of April, deposits from both individual customers and economic organizations at credit institutions reached VND 13.42 trillion, up 0.9% over the previous month, equivalent to about VND 140,000 billion, up 0.4%, equivalent to about VND 50,000 billion compared to the end of 2023.

BIDV has just decided to slightly increase deposit interest rates by 0.3%/year. (Photo: Vietnam+)

Thus, the balance of deposits at credit institutions has officially set a new record after negative growth compared to the end of 2023 in the first three months of this year. Of which, deposits from residents have reached nearly VND 6.72 million billion, up 2.8% compared to the beginning of the year and continuing to set a new record. In April 2024 alone, resident deposits increased by about VND 40,000 billion.

Experts also assessed that the increase in deposit interest rates is completely consistent with the context of the monetary market when the demand for loans of commercial banks has also tended to increase since March. Specifically, after the first 2 months of negative credit growth, credit from March to June has also strongly recovered. In particular, the general direction of the banking industry is to continue implementing solutions to promote credit growth in the last months of the year.

What will the interest rate be?

Some organizations predict that the deposit interest rate level from now until the end of the year will still increase but not sharply.

UOB Bank's leaders forecast that the VND deposit interest rate from now until the end of the year may continue to increase slightly by 0.25-0.75%, creating a harmonious interest rate curve for terms from 1 month to 12 months at around 3% to 6%. This is a reasonable level in stable macroeconomic conditions, inflation has been controlled around 4% and the USD/VND exchange rate may fluctuate by 4%-5% in 2024.

Experts from KB Securities Vietnam (KBSV) also believe that savings interest rates will continue to increase by 0.5% from now until the end of the year, reaching levels around the COVID-19 bottom in the 2020-2021 period.

Faced with this situation, KBSV also forecasts lending rates in the remaining two quarters of this year. According to this organization, when capital costs increase, combined with the fact that lending rates have bottomed out, they are likely to remain flat or increase slightly by the end of the year. The specific increase will depend on each bank. The group of state-owned banks, due to their role in supporting the economy, will keep lending rates relatively low, while private banks tend to increase interest rates to adjust to the increase in input interest rates.

Experts predict that lending interest rates will not fluctuate much. (Photo: Vietnam+)

Meanwhile, speaking about concerns about rising lending interest rates in the coming time, a leader of the Big4 group expressed his opinion. The State Bank has sold USD to intervene in the exchange rate, which means it has drained a certain amount of VND from the system. At the same time, the State Bank continues to drain VND through the issuance of treasury bills. This shows that the liquidity in the system shows no signs of tension.

Besides, credit demand is still very weak, so there is no reason for commercial banks to join the race to increase deposit interest rates to attract people's idle deposits.

Because according to observations of the way many banks adjust interest rates, it can be seen that they only increase sharply for terms with few depositors such as 4-5-7-8-9-10-11 months, but increase very gently for key terms (6 months and 12 months).

Therefore, according to the leader's point of view, lending interest rates will not fluctuate much compared to before.

Sharing the same view, Ms. Phan Thi Thu Hang - Head of Investment Consulting Department of VPS Securities Company said that interest rates have recently increased but in fact only increased on the basis of a very low bottom in the early period of 2024. Accordingly, although the mobilization interest rate level has increased, it is still lower than the period before the COVID-19 pandemic and that shows that the increase in interest rates has not had enough significant impact on other asset channels, including securities./.

Source: https://baolangson.vn/xu-huong-lai-suat-huy-dong-tang-lai-suat-cho-vay-tu-nay-toi-cuoi-nam-se-ra-sao-5015916.html