After the State Bank of Vietnam yesterday (March 13) officially lowered the ceiling on deposit interest rate on Vietnamese Dong, all commercial banks also cut deposit rates.
The maximum deposit interest rate allowed to banks is now 13 per cent a year for over one month term, down by 1 percentage point compared to the old rate.
|Customers in Exmimbank (Photo: SGGP)|
Late yesterday afternoon, Asian Commercial Bank said it will apply the new cap on deposits with terms ranging from one to 12 months as of March 13, despite the fact that last week ACB cut lending rate to 18.5 per cent a year.
VietinBank also announced that it would lower the yearly deposit rate to 13 per cent. According to Le Duc Tho, Vice Director-General of VietinBank, a disparity of around 2.5 to 4 percentage points between deposit and lending rates is enough for banks to ensure expenses. The lowering of interest rate is suitable to the reality of Vietnam’s economy and shows optimistic signs of a recovery, he added.
Consequently, inflation and the macro-economy should be fortified in order to allow lending rates to drop further, he said.
Meanwhile, many other banks said short-term deposits will be subject to the maximum rate of 13 per cent a year, while rates for long-term deposits will drop to 12 per cent a year. For savings with a term less than one month, the new rate will drop by 1 percentage point to 5 per cent a year.
For their part, Ocean Bank, Tien Phong Bank and SeA Bank said they will apply the new cap on deposits with terms ranging between 1 and 12 months at 13 per cent per year.
“With a 13 per cent rate cap, and the 4 percentage point disparity, a lending interest rate of 17 per cent a year is reasonable,” said the CEO of Oriental Commercial Bank.
Meanwhile, the refinancing interest rate has been lowered to 14 per cent from 15 per cent a year and overnight rate in the inter-bank electronic payment has cut to 15 per cent from 16 per cent, while the discounting rate has slashed by one percentage point to 12 per cent.
The central bank said the reductions were made on the basis of cooling inflation and the banks’ improvements in liquidity.
Lending interest rate will drop to 14.5 per cent
The central bank said it was not concerned that the lowered deposit interest rate will reduce the mobilised capital of credit institutions, which could result in a liquidity shortage, forcing lending rates to soar again.
The stock market has responded favourably after the cut in deposit rates by commercial banks.
Meanwhile, SBV Governor Binh told media that lending interest rates can fall to between 14.5 percent and 16.5 percent a year in accordance with the lowered key interest rates.
The central bank said it was not concerned that the lowered deposit interest rate will reduce the mobilized capital of credit institutions, which could result in a liquidity shortage, forcing lending rates to soar again.
Together with the deposit interest rate cap reduction, the central bank has also cut other key interest rates such as refinancing and overnight interbank rates, he said.
Consequently, the combat against inflation, and the macro-economic stabilization should be fortified in order to allow lending rates to drop further, explained Governor Binh.
He added that the 14.5-16.5 percent rates, though much lower than the old figures, which were sometimes more than 20 percent a year, are still high given the businesses’ ability