Many banks have slashed deposit interest rates by 20-40 basis points given their ample liquidity, Tien Phong newspaper reports. Vietnam Prosperity Commercial Bank (VPBank) has lowered rates by 20 basis points for deposits of less than six months, 30 basis points for six- and seven-month tenors, and 40 basis points for savings of between eight and 11 months. This is the third deposit rate cut of VPBank in two months.

Vietnam International Bank (VIB) also adjusted down its rates last month. The rate for savings of one to three months is now 5.1%, down 30-50 basis points against January, while six-month savings get a rate of 6-6.3% depending on the size of deposit, a decline of 20-40 basis points.

At Military Bank (MB), the rate for six-month deposits is now 5.5%, down from 5.7% in early February. Meanwhile, the rate for the 12-month term is kept unchanged at 7.2%.

The deposit rates are even lower at commercial banks with State holdings. The Vietnam Bank for Industry and Trade (VietinBank) has reduced the rate ceiling for six- to eight-month savings by 50 basis points to 4.8%. However, the rates for most long-term tenors from 12 months to less than 36 months are unchanged at 6.8-6.9%.

The Bank for Investment and Development of Vietnam (BIDV) also revised down its rates twice last month. In the first reduction, the rate for one- to two-month savings was down by 20 basis points.

In the second adjustment last month, BIDV cut the rate for deposits of 364 days and 13 months by 10 basis points. The bank’s current rates for savings of one to two months and longer than 12 months are 4.1% and 6.8-6.9% respectively.

In general, banks tend to reduce their rates for short-term deposits by 20-40 basis points. The rates are 10-30 points higher than late last year.

It is noteworthy that the difference between the rates at joint stock banks and State-owned banks is as high as 50-90 points for tenors of less than 12 months.

According to the National Financial Supervisory Commission, the loan-to-deposit ratio last month was 88.2%, up from 87.8% late last year. Liquidity in the banking system is ample as the State Bank of Vietnam has bought huge amounts of foreign currencies and the disbursement of capital raised from Government bond sales is slow.

Capital mobilized from economic organizations and individuals in the first quarter of the year rose 3% over the end of last year and was higher than the average last year (2.6%). In addition, credit growth in the first three months of 2018 was reported at 3.5% against late last year while the rate was 4.3% in the same period last year.

The interbank market also saw a plunge of 0.47-1.2 of a percentage point in deposit rates for overnight, one-week and one-month tenors to 0.83%, 0.98% and 1.73% respectively.

Source: The Saigon Times

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