Banks lower deposit rates following good liquidity

VPBank lowered its annual interest rates for under-six-month and 12-36 month deposits by 0.2 percentage points. (Photo: VPBank)

VPBank has applied new rates since March 30, lowering its annual interest rates for under-six-month and 12-36 month deposits by 0.2 percentage points. The bank’s rates for 6-7 month and 8-11 month deposits were also reduced by 0.3 and 0.4 percentage points, respectively. VIB also cut the deposit rates twice in March. Accordingly, the rate for 1-3 month deposits was reduced by 0.3-0.5 percentage points to 5-5.1 percent, while rates for deposits with terms of more than 6 months were also slashed by 0.2-0.4 percentage points. Military Bank also adjusted interest rates downwards for short-term deposits by 0.1-0.2 percentage points against February. The same move was also seen at State-owned commercial banks. BIDV, for example, reduced its rate for 1-2 month deposits by 0.2 percentage points and 0.1 percentage points for deposits with terms of 364 days and 13 months. VietinBank even cut the rates by 0.5 percentage points, applying the 4.8 percent rate for six, seven and eight-month deposits. However, the rates for long-term deposits of 12-36 months remained unchanged at 6.8-6.9 percent per year. According to the National Financial Supervisory Commission (NFSC), the loan-deposit ratio of the banking system by the end of March stood at 88.2 percent, higher than the 87.8 percent rate at the end of last year. In contrast to forecasts late last year that banks’ savings channels will become less attractive as cash flows start to shift to other channels in the context of the stock market continuing to prosper and real estate warming up, the NFSC’s report showed that capital savings remains attractive to many people in the first months of the year. Capital mobilisation of the banking system in the first quarter of this year rose 3 percent against 2.6 percent in the first quarter of 2017, while credit growth slowed down to 3.5 percent against 4.3 percent in the same period last year, according to the NFSC’s report. A recent survey of the State Bank of Vietnam’s Monetary Forecasting and Statistics Department also showed that credit institutions hope the average mobilisation growth in the second quarter of this year will be some 4.71 percent, much higher than the first quarter, and the annual mobilisation growth will reach around 16.65 percent, equivalent to the levels of 2017 and 2016. Notably, credit institutions also expect deposits from six months to one year to account for 83-86 percent of the total mobilisation in the second quarter and throughout 2018. However, the NFSC also pointed out another reason for the stable liquidity of the banking system in the first quarter of 2018. This stability was partly due to the increase in foreign capital purchases by the SBV and the slow disbursement of Government bond capital, the financial watchdog said. On the inter-bank market, interest rates also dropped significantly compared with February. Accordingly, the interest rates of loans in VND fell by 0.47, 0.9 and 1.2 percentage points against late last year to 0.83, 0.98 and 1.73 percent for overnight, one-week and one-month loans, respectively.