Banks cut deposit rates thanks to good liquidity

Monday, Apr 16, 2018 08:00

VPBank lowered its annual interest rates for under-six-month and 12-36 month deposits by 0.2 percentage points. – Photo VPBank

Many banks have recently reduced deposit interest rates by 0.2-0.4 percentage points against earlier this year due to good capital mobilisation amidst the credit slowdown.

VPBank has applied new rates since March 30, lowering its annual interest rates for under-six-month and 12-36 month deposits by 0.2 percentage points.

The bank’s rates for 6-7 month and 8-11 month deposits were also reduced by 0.3 and 0.4 percentage points, respectively.

VIB also cut the deposit rates twice in March. Accordingly, the rate for 1-3 month deposits was reduced by 0.3-0.5 percentage points to 5-5.1 per cent, while rates for deposits with terms of more than 6 months were also slashed by 0.2-0.4 percentage points.

Military Bank also adjusted interest rates downwards for short-term deposits by 0.1-0.2 percentage points against February.

The same move was also seen at State-owned banks. BIDV, for example, reduced its rate for 1-2 month deposits by 0.2 percentage points and 0.1 percentage points for deposits with terms of 364 days and 13 months.

VietinBank even cut the rates by 0.5 percentage points, applying the 4.8 per cent rate for six, seven and eight-month deposits. However, the rates for long-term deposits of 12-36 months remained unchanged at 6.8-6.9 per cent per year.

According to the National Financial Supervisory Commission (NFSC), the loan-deposit ratio of the banking system by the end of March stood at 88.2 per cent, higher than the 87.8 per cent rate at the end of last year.

In contrast to forecasts late last year that banks’ savings channels will become less attractive as cash flows start to shift to other channels in the context of the stock market continuing to prosper and real estate warming up, the NFSC’s report showed that capital savings remains attractive to many people in the first months of the year.

Capital mobilisation of the banking system in the first quarter of this year rose 3 per cent against 2.6 per cent in Q1 2017, while credit growth slowed down to 3.5 per cent against 4.3 per cent in Q1 2017, according to the NFSC’s report.

A recent survey of the State Bank of Viet Nam’s (SBV’s) Monetary Forecasting and Statistics Department also showed that credit institutions hope the average mobilisation growth in Q2 this year will be some 4.71 per cent, much higher than Q1, and the annual mobilisation growth will reach around 16.65 per cent, equivalent to the levels of 2017 and 2016. Notably, credit institutions also expect deposits from six months to one year to account for 83-86 per cent of the total mobilisation in Q2 and throughout 2018.

However, the NFSC also pointed out another reason for the stable liquidity of the banking system in Q1 this year. This stability was partly due to the increase in foreign capital purchases by the SBV and the slow disbursement of Government bond capital, the overnment’s financial watchdog said.

On the inter-bank market, interest rates also dropped significantly compared with February. Accordingly, the interest rates of loans in dong fell by 0.47, 0.9 and 1.2 percentage points against late last year to 0.83, 0.98 and 1.73 per cent for overnight, one-week and one-month loans, respectively. - VNS

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