Vietnam banks cut 12-month deposit rates to below 6%

The 12-month deposit interest rates at major banks in Vietnam, domestic and foreign, have fallen below 6% this month.

State-controlled Vietcombank, BIDV, VietinBank and Agribank, also known as the “Big 4” banks accounting for more than half the credit in the economy, reduced their deposit interest rates for 12-month terms from 6.3% to 5.8%, starting Wednesday.

The decrease is lesser for other term deposits. The interest rate for one-month and three-month deposits has gone down by 0.3 percentage points to 3% and 3.8%, respectively. For six-month term deposits, the rate has dropped to 4.7%.

The move followed calls from the Government and the State Bank of Vietnam for lower loan interest rates to support economic recovery.

At the moment, the 12-month deposit interest rates at many domestic bank are about half of what they were at the end of 2022. The trend has been similar at major foreign banks in the country.

The rates at HSBC, unchanged in July and August, are already below 6%. The highest rate of 3.75% is given for 12 to 36-month deposits. The rates are lower at 2.75% for six-month and nine-month deposits, 2.25% for three-month terms, and 1% for one-month and two-month terms.

The HSBC rates are higher for premier customers with the highest one of 5% for 12-month terms. 4% is offered to terms of six, 18, 24, and 36 months. Three-month and nine-month terms are subject to 3% interest rate.

At Singapore's UOB, for individual customers, the deposit interest rates are 5% for 12-month terms, 4% for six-month and nine-month terms, and 2% for one-month terms. For small- and medium-sized enterprises (SME), the deposit interest rates are slightly higher, at 5.5% for six-month and nine-month terms and 4% for terms between one and four months. The figure is the same at 5% for 12-month terms.

At Korean-invested Shinhan Bank, the highest interest rate is 6.3% for 12-month deposits, and 5.4% for 18-60 months. The rates are even smaller at 5.2% for six-month and nine-month terms, 3.9% for one-month and two-month terms, and 4.3% for three-month terms.

Thailand’s Kasikornbank (KBank) provides its highest interest rate of 5.5% for terms of 12-36 months. The six-month interest rate is 5%, while that for one-month and three-month terms are 2.5% and 3.5%, respectively.

In Resolution 124 issued earlier this month, Prime Minister Pham Minh Chinh requested the State Bank of Vietnam to coordinate with agencies and localities to implement monetary policies in a proactive, timely and flexible manner in sync with fiscal and other policies to strongly promote economic growth and remove difficulties for production and business.

The central bank was also asked to stabilize the foreign currency market and manage the exchange rate as the situation demanded.

The PM asked for an appropriate credit increase alongside improved credit access with a focus on priority areas including growth drivers of consumption, investment and export.

Economist Le Xuan Nghia a member of the National Financial and Monetary Policy Advisory Council, has said that Vietnam has ample room to make further interest rates cuts in the coming time because lending rates remained high and cash flow was limited.