Deposit interest rates lowered following Vietnam central bank’s cut

Commercial banks in Vietnam have cut their deposit interest rates by 0.3-0.7 percentage points in line with the State Bank's lowered rates.

The move brought the 12-month deposit rates down to 6.8-8.5%.

The State Bank of Vietnam (SBV) lowered ceiling interest rates on dong-denominated deposits by another 0.5 percentage points for terms below six months from Thursday to support economic growth.

Under the central bank’s decision announced late Tuesday, deposit interest caps were brought down from 5.5% to 5% per year for terms from one month to below six months.

Meanwhile, the ceiling rate for deposits in Vietnamese dong at residential credit funds and microfinance institutions has been cut from 6% to 5.5% per year. The rate for deposits of six months or more can be set by banks on the basis of market capital supply and demand.

The central bank has asked commercial banks to decrease loan interest rates for all current and new customers. While many banks have been lowering deposit interest rates since early May in preparation for lower loan interest rates, they have complied with the central bank’s latest request. The highest deposit interest rate for 12-month terms is about 8.5%.

ABBank brought down its deposit interest rates for under-six-month terms to the maximum figure of 5% per year, while the rates for longer terms also went down by 0.3-0.7 percentage points for 36-month terms from 9.2% to 8.5%, 12-month terms to 8.3%, and six-month terms to 8.2%.

At VietBank, the deposit rate for 12 months went down to 7.8%, while that for 13 months dropped to 7.9%.

VPBank is offering the maximum rate of 5% for six-month terms on deposits of VND10 billion or more, and 4.9% for deposits below VND10 billion. The figures for six-month, 12-month, and 36-month terms remain at 7.8%, 7.8%, and 7%, respectively. VPBank’s highest rate of 8% is available for online deposits of VND10 billion or more for terms of eight or nine months.

Regarding Vietcombank, VietinBank, BIDV, Agribank, or the “Big 4” state-controlled lenders, their deposit interest rates are among the lowest at 6.8-7.2% for terms of 12 months.

Experts have projected that deposit interest rates for longer terms will fall soon. Vietnam still has room to lessen regulatory interest rates thanks to cooling inflation and stable exchange rates. However, another key factor is the economy’s ability to absorb capital, according to experts. Besides, excessive interest rate cuts may reverse capital flow, leading to negative impacts, experts said.