The prevailing trend continues to be the decline in interest rates.

Since Tet holiday, the interest rates on the money market have been fluctuating. While many banks have been lowering their interest rates, a few banks have been cautiously increasing them. For example, Sacombank recently raised its 3-month term deposit interest rate by 0.1 percentage point to 2.7% per annum. Furthermore, BVBank increased its interest rates for longer terms such as 24 months and 36 months by 0.1 and 0.2 percentage points respectively, reaching 5.7% per annum and 5.9% per annum.

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According to industry experts, it is common for some banks to increase interest rates to attract deposits, especially at the beginning of the year. This year, the credit growth targets have been assigned to commercial banks from the very beginning, so it is understandable that some banks have adjusted their deposit interest rates in order to attract capital for future lending needs.

There is also an opinion that, in the course of their business operations, banks sometimes need to make changes to their deposit interest rates in order to attract deposits with certain terms. What is important is that the State Bank of Vietnam (SBV) is always flexible in its management, and there has been no sign of any monetary tension. In fact, the number of banks that have increased their interest rates is very small compared to the number of banks that have decreased their interest rates.

Viet Dragon Securities Corporation (VDSC) believes that this is not a cause for concern and the liquidity system can return to normal by March 2024 based on the following factors: the overnight lending rate is decreasing again; the scale of liquidity pumping by the SBV is low, both in terms of volume and the number of market participants involved in collateralization; long-term interbank interest rate volatility is not experiencing any significant changes. On the other hand, in February 2024, the trend of decreasing deposit interest rates in the banking system continued, mainly among private commercial joint-stock banks with a decrease of 0.1-0.2 percentage points per year.

Market statistics from the beginning of February to February 29, 2024, showed that 23 banks had decreased their deposit interest rates. Not only once, but some banks have decreased their deposit interest rates 2-3 times, and even up to 4 times. In the past week alone, banks have been consistently lowering their interest rates. On February 29, HDBank reduced its deposit interest rates for all terms by a general decrease of 0.2 percentage points. This is the first time in February that HDBank has reduced its interest rates, but it is the fourth time since the beginning of 2024. The new online deposit interest rate chart of HDBank shows that the interest rate for 1-5 month term deposits is now only 2.95% per year, and the 6-month term is 4.6% per year…

On February 28, SHB reduced its online deposit interest rates by 0.5 and 0.4 percentage points for 1 and 2-month terms to 2.6% and 2.7% per year, respectively. The 3-month term also decreased by 0.3 percentage points to 3% per year. Previously, on February 27, VPBank had reduced its deposit interest rates for all deposit terms. This was the first time in the month that VPBank had reduced its deposit interest rates after three previous reductions in January 2024…

Market developments show that the increase in interest rates only occurs locally in some banks and for certain terms. The magnitude of the increase in interest rates is relatively small, less than 0.2 percentage points per year. The downward trend in deposit interest rates continues to dominate. Maintaining a low interest rate environment facilitates businesses’ access to capital at reasonable cost, thereby promoting economic recovery.

From the perspective of the management agency, SBV’s Deputy Governor Dao Minh Tu affirmed that the operating interest rates will remain unchanged at least in the first half of 2024 in order to provide favorable conditions for credit institutions to access low-cost capital from the SBV to support the economy. In addition to appropriate interest rate management in line with market trends, macroeconomic conditions, inflation, and monetary policy objectives, the SBV also encourages credit institutions to reduce costs and simplify lending procedures, striving to reduce lending interest rates to support the economy.

Experts believe that the low-interest rate environment can continue into the early months of this year. With stable operating interest rates, the lending interest rate environment in 2024 is expected to be reasonable, giving businesses and individuals confidence in their business operations and helping the economy recover.

However, reducing interest rates is not the only factor. The root cause of supporting businesses and promoting growth lies in improving the capital absorption capacity of the economy. Therefore, in addition to the efforts of the banking sector, there must be comprehensive guidance from the government to the entire political system, in order to improve the investment and business environment, support businesses, stimulate growth momentum, and boost consumer demand. Companies themselves must have transparent financial reporting in order to increase their ability to access loans at a reasonable interest rate.