The pressure to increase deposit interest rates will happen at the end of the year

When deposit interest rates have decreased, are savings deposit channels attractive?

The increase in deposit interest rate causes idle deposits to return to the bank. Photo: Internet

Surveying the market, deposit interest rates at some commercial banks continued to increase, especially for long terms.

Some banks have raised the deposit interest rate to about 7.4-7.55% per annum for long terms over 18 months, 24 months and 36 months, bringing the interest rate level for these terms higher by about 5% over the same period last year.

Among banks, SCB is one of the banks with the highest interest rates for long terms when online interest rates for 18-month, 24-month and 36-month tenors are all at 7.55%/year.

But interest rates for terms of shorter terms are still quite high, all over 7%/year. Specifically, the online interest rate for the 15-month term is 7.5%/year, the 13-month term is 7.45%/year, and the 12-month term is 7.3%/year.

Similarly, NamABank has also raised online deposit interest rates to 7.4%/year with terms of 18 months, 24 months and 36 months. PvcomBank also listed interest rates for these terms at 7.25%/year.

Some small-scale banks such as BacABank, BaoVietBank, CBBank and KienLongBank also list interest rates above 7% for long terms of 12 months or more. The difference in interest rates between banks is up to nearly 3% depending on the deposit term.

Notably, despite having a lower interest rate than the above banks and keeping the interest rate for deposits under 12 months unchanged, in the new deposit interest rate table applied from July 2022, Agribank listed the interest rate of 5.6%/year for terms of 12 months or more, 0.1 percentage point higher than before. This is the first change in the deposit interest rate of this bank since September 2021, and also the first increase in the deposit interest rate for a term of 12 months or more of Agribank in nearly four years.

With this move, Agribank becomes the second state-owned bank after BIDV to raise deposit interest rates in 2022. In the past, BIDV also increased interest rates by 0.1 percentage points for all long terms of 12 months or more.

However, state-owned banks still have the lowest deposit interest rates in the whole system. In which, Vietcombank is applying the interest rate bracket from 3%/year to 5.5%/year for terms from 1 month to 60 months, VietinBank maintains the interest rate from 3.1 to 5.6%/year for tenors.

With shorter terms, the interest rate level also recorded a slight increase. TPBank, after many months of not adjusting the personal deposit rate, has also increased it by 0.2 percentage points in most terms from July for both over-the-counter and online transactions.

For a 6-month term, most banks list interest rates from 6.2-6.8%/year. For a 1-month term, banks listed deposit interest rates ranging from 3-4%.

12-month term deposit interest rate for institutional customers from 2020 to present.

It can be seen that the interest rate race started strongly increasing about three months ago, helping the idle cash flow to return to the bank.

According to experts of VnDirect Securities Company, the increase in deposit interest rates will slow down in the third quarter of 2022 because of low demand for capital mobilization; many banks have temporarily run out of space for credit growth.

However, the increase in deposit rates may accelerate again in the fourth quarter after the State Bank of Vietnam (SBV) raised the credit growth limit for commercial banks. Therefore, deposit rates may continue to increase by 30-50 basis points in the last six months of 2022, causing the 12-month term of commercial banks to increase to about 5.9-6.1%/year, which is still lower than the pre-pandemic level of about 7%/year.

According to SSI Research's weekly money and bond market bulletin, the State Bank will continue to operate the monetary policy flexibly and under suitable conditions, it will approve the loosening of the credit ceiling for commercial banks. The pressure to raise deposit rates will fall towards the end of the year, especially when the ratio of short-term capital for medium and long-term loans will decrease from 37% to 34% from October 1.

The increase in deposit interest rates raises concerns about the impact on output interest rates. But Dr. Nguyen Quoc Hung, General Secretary of the Vietnam Bankers Association, said that the trend of lending interest rates will not increase because raising lending rates must be considered in line with reality even though raising capital with higher interest rates. Moreover, the adjustment of deposit interest rates is the bank's own strategy to better attract idle capital.