“The Golden Age” of savings deposits
In January 2023, more than a year ago, Mr. Nguyen Minh Duc (Hanoi) was advised by the staff of a major private bank to deposit a sum of 2 billion Vietnamese dong. If he chooses to deposit for a 6-month term, the interest rate is 10.2% per year. If he chooses to deposit for a 13-month term, the interest rate goes up to 11.2% per year. In the end, Mr. Duc chose the 6-month term, with a savings deposit of 2 billion dong in the short term, and upon maturity, he received over 100 million dong in interest.
(Illustrative photo)
The race for increasing savings deposit interest rates has been strong since October 2022 until the beginning of 2023. From the deposit interest rate of 5-6% per year in the first half of 2022, this number continuously increased.
Specifically, at the end of October 2022, the interest rate on online deposit products for terms under 6 months increased by over 5% per year. For deposits with terms from 6 to 12 months, the savings interest rates at most banks ranged from 7-9% per year. For terms over 12 months, some private banks offered interest rates over 9% per year.
Entering January 2023, the deposit interest rates continued to rise with some banks offering rates as high as 11%, and even larger sums of money in the hundreds of billions could earn over 12% per year. For example, at VPBank, at certain times in January 2023, the online savings deposit for a 13-month term reached over 11% per year. For a 6-month term, the average interest rate applied was 10% per year (after factoring in promotions), for deposits over 300 million dong.
ABBank has also applied deposit interest rates as high as 11.5% per year for a fixed 13-month term deposit. The negotiated interest rates given by SHB, Kienlongbank, MSB, Pvcombank, NCB went above 11% per year.
Deposit interest rates turning downward
However, starting from February 2023, the savings deposit interest rates began to gradually decline. In contrast to the beginning of the year, by the end of 2023, savings deposit interest rates decreased by more than half compared to the beginning of 2023. Upon entering 2024, banks continued to lower interest rates for depositors.
Based on our survey at the end of February 2024, for deposits with terms of 1-2 months, interest rates at banks ranged from 2-3% per year. In particular, the advertised interest rate for a 1-3 month term at Vietcombank and Agribank was only 1.7% per year, the lowest in the system. The interest rate for a 3-5 month term at these two banks was only 2% per year.
For a 6-month term, there is no longer any bank maintaining an interest rate above 5% per year in the market.
Meanwhile, for deposits with terms of 9-11 months, only Vietnam Thuong Tin Commercial Joint Stock Bank (Vietbank) applies an interest rate of 5% per year; other common rates are over 4% per year such as BaoViet Bank (4.9% per year), Pvcombank, SHB (4.8% per year), HDBank (4.7% per year). Even in the Big 4 group of banks, deposit interest rates for this term ranged from 3-3.3% per year.
For a 12-month term, the highest interest rate is only close to 5% per year. The highest interest rate belongs to BaoVietBank, which applies a rate of 5.2%.
For a 24-month term deposit, NamABank currently advertises an interest rate of 5.9% per year. Compared to many banks, this is a high-interest rate. Most other banks apply interest rates from 4.7% – 5.5% per year for a 24-month term deposit.
According to economist Mr. Dinh The Hien, lowering savings deposit interest rates is reasonable. After years of managing interest rates ineffectively, banks are gradually adjusting interest rates to reasonable levels, following the interest rate curve.
Meanwhile, Associate Professor Dr. Vo Dai Luoc believes that reducing interest rates is necessary to help the economy recover, especially the real estate investment channel.
Experts also share the same opinion that there is still room for further reduction in savings deposit interest rates. The “golden age” with interest rates above 11% like over a year ago is unlikely to return, at least not this year.
