The annual interest rates for deposits under VND50 million (US$2,366) with one-month and two-month terms are now at 6 per cent and 6.2 per cent, down by 0.5 per cent and 0.4 per cent, respectively.— Photo 24h

HCM CITY (Biz Hub) — Facing difficulties in lending, many commercial banks have reduced their interest rate on dong deposits.

The Asia Commercial Bank (ACB), for example, has cut its rate on conventional- term deposit, with annual interest rates now at 6.5 per cent for one- or two-month terms, and 6.6 per cent for three-month term, about 0.4 per cent lower than before.

Meanwhile, the annual interest rate for longer-term deposits have been reduced slightly to 7.9 per cent for 12 month-term, 8.2 per cent for 13 month-term, and 8.4 per cent for a 24 month-term.

It has also reduced interest rates on other deposit products. For example, the interest rate on its deposit products called "20 month-savings deposit" fell from 7 per cent per year to 6.6 per cent per year.

Nguyen Thanh Toai, ACBs deputy general director, told Tuoi Tre newspaper that his bank was facing difficulties in lending due to economic difficulties, forcing it to cut back interest rate on deposits.

Depending on the situation, the bank will make adjustments, he added.

The Sai Gon Commercial Bank (Sacombank) has also offered a lower interest rate on short-term deposits for the same reason.

The annual interest rates for deposits under VND50 million (US$2,366) with one-month and two-month terms are now at 6 per cent and 6.2 per cent, down by 0.5 per cent and 0.4 per cent, respectively.

Similarly, the annual interest rate for deposits more than VND50 million with one-month and two-month terms has fallen by 0.3 per cent over the previous time to 6.6 per cent and 6.7 per cent, respectively.

According to a Sacombank director, the lending demand in the first few months of the year as usual has been low while deposits from individuals and businesses have increased.

In addition, the governor of the State Bank of Viet Nam has said the central bank would continue to tell banks to further cut interest rates on loans to businesses by 1-2 per cent.

The bank cut its deposit interest rate on short-term loans to create a momentum to reduce ending interest rates further, he said.

With similar reasons, other banks have also planned to slash their deposit rates.

Pham Linh, deputy general director of Orient Commercial Joint Stock Bank, said earlier next month the bank would reduce interest rates on short-term deposits to rates equal or a bit higher than that offered by big banks.

Under the current economic climate, enterprises are carefully considering applying for loans, he said.

Currently, there remains a gap in deposit interest rates among commercial banks, but it is not a big difference.

Besides interest rates, commercial banks have launched programmes like lucky draws to attract depositors. — VNS