Five Vietnam banks reduce 12-month deposit interest rates to below 5.5%

Private lenders ABBank, Techcombank, GPBank and SeABank and state-controlled Vietcombank have become the first five Vietnamese banks to cut their 12-month deposit interest rates to below 5.5%.

Starting Tuesday, ABBank announced its 12-month deposit interest rate at 4.7%. The bank’s highest interest rates are 5.2% for seven- and eight-month deposits and 4.9% for terms of six, nine, 10 and 11 months. The rates for other terms are lower than 4.7%.

On the same day, Vietcombank, a “Big 4” bank in Vietnam, reduced its interest rate to 5.3% for term deposits of 12-60 months. Terms of six and nine months will carry interest rates of 4.3%, while that of one and three months will be 3-3.3%.

Starting Monday, Techcombank set its 12-month deposit rates at 5.25% and 5.5% with certain conditions. Online savings would get an additional 0.1 percentage points in interest rates.

GPBank and SeABank are offering interest rates at 5.4% and 5.3%, respectively. The two banks also offer higher rates for some promotional programs.

Other banks, in general, have set the 12-month term deposit interest rates at below 6%. Not accounting for promotional programs, some exceptional cases include BaoViet Bank with 6.3%, DongA Bank with 6.05%, VietABank with 6.2%, HDBank with 6.1%, and others.

In June, the State Bank of Vietnam (SBV) cut its refinance and discount rates by 50 basis points to spur the country’s growth amid prolonged global economic headwinds. The refinance rate went down to 4.5%, the discount rate to 3%, and the overnight electronic interbank rate to 5%. It was the central bank’s fourth policy rate adjustment this year.

Commenting on the move, the Asian Development Bank (ADB) said the central bank has been effectively managing interest rates, cutting them four times this year, going against the global trend of rate hikes. ADB principal country economist Nguyen Ba Hung clarified that economies need to set interest rates in line with inflation.

"Thanks to Vietnam's low inflation, the country has been able to reduce rates." However, the room for reducing interest rates has scaled down as the regulatory interest rate has reached 4.5%, while inflation is expected to inch up to 4%, Hung added.