Banks unexpectedly drop deposit rates

Wednesday, Sep 26, 2018 13:36

OCB is offering 6.8 per cent for six-month deposits, down 0.2 percentage points against the previous week. — VNA/VNS Photo

Several commercial banks have unexpectedly cut deposit interest rates by 0.1-0.2 percentage points per year due to limited credit growth.

OCB this week announced a 0.1-0.2 percentage point decrease on short- and medium-term deposits. Now its rates are 5.3 per cent for one month and 6.8 per cent for six months.

A slight cut, mainly for deposits under six-months, was also seen at other banks such as VPBank and Military Bank.

The move is quite unexpected because over the past two months, many commercial banks have raised deposit interest rates, especially long-term deposits, to prepare to meet the higher demand for capital at the end of the year.

Industry insiders attributed the rate cut to the fact that the banks had already used up nearly all of their assigned credit quota for 2018 so that they don’t need to mobilise capital at high costs. According to regulations, the State Bank of Viet Nam (SBV) sets a credit growth limit for each commercial bank depending on the bank’s health at the beginning of the year.

Lowering interest rates to reduce mobilisation costs is a reasonable solution at this time for the banks, experts said.

Reports from the Saigon Securities Inc shows that banks’ demand for capital had also fallen in the inter-bank market in the past week, helping the rate in the market decline to 2 per cent for overnight loans, 2.38 per cent for one-week loans, 3.15 per cent for one-month loans and 4.03 per cent for three-month loans, down 0.75 percentage points against the previous week. — VNS

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