Vietnam banks cut deposit interest rates to record lows amid lukewarm lending

Commercial banks in Vietnam are unanimously lowering their interest rates on short-term deposits to all-time lows as credit demand stays lackluster despite the year-end peak season nearing.

Compared to the start of this month, four state-controlled commercial banks, also known as Big 4, have reduced their deposit rates by 0.4-0.8 percentage points, mostly for less-than-12-month terms.

Among them, Vietcombank is offering just 1.9% per year for one- and two-month deposits, the lowest among peers and also an all-time low in the country’s banking system. The annualized rate for 60-month deposits is 4.8%.

The lowest rate offered by the bank was 2.2% in mid-December and 2.4% at end-November.

BIDV, another Big 4 lender, has also cut its deposit rates by 0.3-0.4 percentage points. It is offering clients 2.6% for one- and two-month deposits, lower than 3% at the start of this month.

For savings shorter than 24 months, the Hanoi-based bank is offering 5% while the rate for longer terms is 5.3%.

Similar rates are seen at VietinBank and Agribank, the two other Big 4 ones.

From early this month, more than two dozen banks have cut rates, bringing their 12-month deposits to 5.7% at the highest, from 6%-plus last month.

Private banks such as MBBank, ACB, VIB, VPBank, and Techcombank have lowered their rates on offer by 0.1-0.5 percentage points.

According to central bank data, total outstanding loans had hit just 9.87% as of December 13 against the end of 2022, far below the central bank’s credit growth target of 14.5% growth set for this year.