Banks cut short-term deposit rates

A transaction at a Vietcombank branch in Ha Noi. Vietcombank was one of several major commercial banks that lowered interest rates for deposits in dong with terms of less than a year. - VNA/VNS Photo Tran Viet

State Bank of Viet Nam (SBV) sources told the press that these included State controlling banks such as Vietcombank, VietinBank, Bank for Investment and Development of Viet Nam (BIDV), and Agribank.

The banks now list rates of 0.3-0.5 per cent per year for deposits with no terms, or terms of less than a month. The rates are 4.2-4.3 per cent per year for terms ranging from a month to less than three months.

Terms of three months to less than five months are subject to a rate of 4.8 per cent per year, and an annual rate of 5 per cent is applied for terms of five months to less than six months.

Six-month to less-than-nine-month deposits have a rate of 5.3 per cent per year, and the annual rate is 5.5 per cent for nine-month to less-than-twelve-month terms.

SBV sources said the commercial banks' moves to lower rates were in line with Government directives for macro-economic operations.

The rate reduction followed Directive No 04/CT-NHNN, which the central bank issued in late May asking commercial banks to save costs to cut lending rates, thereby support production and business activities and the economy.

Viet Nam News reported earlier this month that several commercial banks, such as Ban Viet Bank, VPBank and Eximbank had raised their deposit rates in an attempt to satisfy new SBV regulations that are due to take effect next year.

The central bank's Circular No 06/2016/TT-NHNN, taking effect on July 1, 2016, stated that commercial banks will have to lower the ratio of short-term funds used for medium to long-term loans from 60 per cent to 50 per cent in 2017.

Due to the deposit rate hikes, there was concern in the market recently that a lending interest hike was imminent. However, the SBV affirmed that it would act to keep lending rates stable over the remaining months of the year.

The SBV has been implementing flexible monetary policies this year to match market developments, and support systematic liquidity and maintain stability of interest rates. It also aims at stabilising exchange rates and increasing national foreign reserves.