6 percent is the new 12-month deposit rate of ABBank, the 18-month ones of OceanBank and HDBank, and the 36-month deposit rate of OCB. State-owned banks (Vietcombank, BIDV, VietinBank, and Agribank) also have more attractive 12-month deposit rates of around 4.98 percent a year. These rates are predicted to continue their growing trend until the end of this year, yet by no more than 1 percent.
The rise in deposit rates has prompted over 20 banks to follow suit since the beginning of June 2024. Following the dip in savings rates to around 4 percent in March 2024, rates have now surpassed 6 percent per annum at some banks.
Dragon Capital's Chief Strategy Officer Le Anh Tuan shared that exchange rate pressures are among the factors driving banks to raise deposit rates by an additional 0.5-1.5 percent per year in the remaining months of the year. The USD/VND exchange rate has risen by more than 5 percent since the beginning of the year.
Nonetheless, he maintained that the monetary policy will continue to be accommodative from the regulatory authorities, and the overall deposit rate level will merely transition from extremely low to low in the coming period, without raising undue concerns.
Experts in the field attribute this deposit rate increase to the fact that banks are preparing for higher liquidity needs to meet anticipated credit demand growth in the remaining quarters of the year.
According to the State Bank of Vietnam, credit growth reached 3.79 percent as of mid-June 2024 compared to the end of 2023. While credit growth remains subdued, it has shown gradual improvement over the months, and banks' credit disbursement to the economy in the first half of 2024 exceeded that of the same period in the previous three years.
Despite this positive sign, many banks continue to experience negative credit growth in the first half of the year. To stimulate this growth in the second half, SBV has urged banks to further reduce lending rates, aiming to achieve a balance between lending and deposit rates. However, with deposit rates already on the rise, market concerns are mounting that lending rates will follow suit in the near future.
Director of WiGroup Financial Data and Technology JSC. Tran Ngoc Bau believes that the resurgence of deposit rate hikes is not entirely unexpected, as experts anticipated 3-6 months ago. He expects rates to rise by only around 0.5-1 percent per annum and then remain stable or even decline in the following year.
However, he cautions that lending rates are likely to increase more slowly than deposit rates since maintaining excessively low rates for too long will have negative consequences for businesses, banks, and the economy as a whole.
Therefore, he proposes a more appropriate solution. Banks should continue to streamline capital channels to make it easier for businesses to access diverse funding sources; ensure macroeconomic stability, monetary policy, and exchange rates; and avoid putting undue pressure on the banking system to prevent lending rates from rising, as this could lead to slower lending and distortions in the market mechanism.
Director Tran Van Lam of the Transaction Center at Shinhan Bank Vietnam stated that lending rates are likely to remain at their current low levels until at least the fourth quarter of 2024. This strategy aims to encourage businesses to resume borrowing and to boost credit demand in the coming quarters.
Additionally, in line with government and central bank directives, banks in general, and Shinhan Bank Vietnam in particular, will continue to implement cost-cutting measures to maintain low lending rates and provide ongoing support to the economy in the remaining months of the year.
VietinBank has already reduced lending rates eight times since the beginning of the year and currently offers some short-term loans at rates lower than deposit rates. The bank emphasizes its commitment to maintaining low rates to continue providing effective credit support to businesses and individuals in the coming period.
Agribank also intends to adopt lending solutions to promote safe and efficient credit growth in the coming period. These measures include continuing to offer preferential interest rate credit programs for specific customer segments and implementing appropriate interest rate policies to support customers. These efforts will not only benefit customers but also contribute to the bank's credit growth objectives.
Due to the relatively weak demand for capital in the economy, banks will find it challenging to raise lending rates in the remaining two quarters of the year. Maintaining competitive rates is crucial to attract businesses seeking loans and accelerate credit growth.
