Idle funds flow into deposit channels as interest rates rise

After savings interest rates dipped to around 4 percent in March 2024, the market has now witnessed the emergence of the highest interest rates surpassing 6 percent per annum at certain commercial banks.


Since early June 2024, over 20 commercial banks have raised their deposit interest rates.

Specifically, starting from June 26, SHB has adjusted its highest rate to 6.1 percent per annum for terms of 36 months, following a 0.2 percent per annum increase across all terms. Other revised rates include 1-2 months at 3.3 percent per annum, 3-5 months at 3.4 percent per annum, 6-8 months at 4.7 percent per annum, 9-11 months at 4.8 percent per annum, 12 months at 5.2 percent per annum, 13-15 months at 5.3 percent per annum, 18 months at 5.5 percent per annum, and 24 months at 5.8 percent per annum.

ABBank has recently elevated its highest interest rates by up to 1.4 percent per annum. As a result, the 12-month deposit rate at ABBank has increased to 6 percent per annum following a 0.4 percent per annum hike. Additionally, the 6-month deposit rate has been lifted by 0.8 percent per annum to 5.6 percent per annum, and rates for 7-11 month terms have been elevated by 1.4 percent per annum to 5.8 percent per annum.

OCB has also raised its highest deposit interest rates by an additional 0.3 percent per annum. As a result, deposit rates for 1-5 months now range from 3.7 percent to 4.3 percent per annum, rates for 6-8 months have risen to 4.9 percent per annum, rates for 9-11 months have surged to 5 percent per annum, and rates for 12-15 months have been hoisted to 5.2 percent per annum. OCB maintains its rates for terms exceeding 15 months, with the 36-month term offering the highest deposit rate of 6 percent per annum.

In addition, NCB, OceanBank, and HDBank now offer the highest 18-month deposit rates at 6.1 percent per annum.

Not only private commercial banks but also State-owned banks, namely Vietcombank, BIDV, VietinBank, and Agribank, have raised their 12-month deposit rates to 4.98 percent per annum, up from a low of 4.68 percent per annum at the beginning of April 2024.

Amidst stagnant growth in other investment avenues like real estate, stocks, and gold, idle funds have increasingly flowed into banks as safe havens. According to the latest State Bank of Vietnam data, total deposits from individual and corporate clients in credit institutions reached VND13.3 quadrillion by the end of March 2024, up 1.1 percent from the previous month (an increase of approximately VND140 trillion). Specifically, deposits from individuals neared VND6.68 quadrillion, up 2.2 percent since the beginning of the year, setting a new record.

In March 2024 alone, resident deposits climbed by an additional VND39 trillion. Business deposits reached VND6.62 quadrillion, marking a 3.14 percent decrease or over VND210 trillion compared to the beginning of the year. However, compared to the end of February 2024, business deposits increased by over VND100 trillion.

By the end of February 2024, resident deposits in the banking system had reached a record high of nearly VND6.64 quadrillion, up 1.6 percent from the beginning of the year. Thus, following a decline in January, resident deposits have resumed their upward trend in the banking system.

According to statistics and assessments from securities companies, deposit interest rates increased by 0.3-0.5 percent in the second and third quarters of 2024 and are expected to continue rising in the fourth quarter. However, it is unlikely to trigger a deposit interest rate race across the entire market. Overall, interest rates are anticipated to increase by 0.5-1 percent throughout 2024.

Experts suggest that as credit growth gradually improves, savings interest rates increase because commercial banks prepare liquidity to anticipate heightened credit demand in the remaining quarters of the year.

Data from the State Bank of Vietnam also reveals that as of mid-June 2024, credit has increased by 3.79 percent compared to the end of 2023. While credit growth remains moderate, the growth rate has improved consistently month over month. Banks supplied higher credit volumes to the economy in the first half of 2024 compared to the same period three years ago.

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