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

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Deposit rates have been decreased following the SBV's decision. Photo: H. Diu

Lowering interest ratessimultaneously

According to the SBV's decision to adjust interest rates, from March 17, the maximum interest rate applicable to demand deposits and terms ofless than one month decreased from 0.8%/year to 0.5%/year. The maximum interest rate applicable to deposits with terms of one month to less than six months decreased from 5.0%/year to 4.75%/year.

After the direction of the State Bank, commercial banks simultaneously adjusted deposit rates and reduced interest rates for terms of less than six months to meet the new regulations of management agencies.

Specifically, the highest interest rate of banks for one-month to less than six-month deposits was only 4.75% per annum, while short and long-term deposits were also reduced. Notably, the difference between three-month term deposit rates between state-owned and private banks was shortened to only 0.05percentage points.

In the group of state-owned commercial banks, Vietcombank adjusted the interest rates for one-month and two-month terms to 4.3%/year, three-month terms to 4.7%/year, down 0.1 percentage points.Vietinbank decreased by 0.05%, posting interest rates for three months to less than six months terms at 4.75%/ year, interest rates for one to three-month terms at 4.3% / year.

In the group of private joint-stock commercial banks, LienVietPostBank decreased by 0.4 percentage points for one to two-month term interest rates; for three to less than five month term, only 4.8% year, a decrease of 0.2 percentage points compared to the previous period.

Sacombank, VIB, Techcombank and OCB interest rates from one to less than six months ranged from 4.3% to 4.75%. For one-month or non-term deposits, these banks also lowered their interest rates from 0.8% to a maximum of 0.5% / year.

TPBank also adjusted the savings interest rate for less than six months to a maximum of 4.7% / year – equal to the common mobilizing interest rate up to the present time of commercial banks. Compared to the deposit rate table at the beginning of March, this bank has reduced by 0.25 percentage points of 3-month term savings interest rates.

Although the State Bank does not stipulate the ceiling interest rate fromsix months, it is still left to credit institutions to decide for themselves based on the supply and demand of capital in the market. However, the medium - long term interest rates of many banks have also decreased.

Specifically, atVietCapitalBank, the interest rate for 24-60 month period decreased 0.1 percentage points to 8%/year, twelve month term interest rate decreased 0.1 percentage points to 7.8%/year; the highest interest rate at ACB has dropped sharply from 7.8%/year to 7.45%/year (for 18-24 month term, from VND 5 billion or more).

Depositors still get benefit

It can be seen that the deposit interest rate level for most terms has decreased from 0.5-1.5%/year compared to the end of 2019. According to experts, banks are lowering interest rates for loans from 0.5% to 1.5% for businesses, if deposit rates remain high as before it will create great pressure for banks.

In this situation, many people are concerned that reducing deposit rates will reduce the attractiveness of this financial channel. According to financial – bankingexpert, TS. Bui Quang Tin, saving is still one of the effective channels. Because of the impact of the epidemic, financial channels such as securities, gold, and USD are fluctuating very strongly and abnormally, real estate is having low liquidity, loan interest rates have not decreased compared to expectation of investors.

Banks cut savings rates to ensure lower-interest loans A number of commercial banks have lowered their interest rates on savings accounts by 0 1 0 ...

According to the calculation of this expert, current mobilizing interest rates from 7-8%/ year except 4% inflation, people still get 3-4% interest. Even from March 17, some banks lowered the interest rate for 1-month term deposits to less than 6 months to 4.75%, if the term of less than six months is still a certain balance. Therefore, saving is still an attractive and effective investment channel in the current context.