Is the Rate Hike Here to Stay?

In early May, a wave of banks began offering increased interest rates on savings accounts across a range of tenures.


As of May 4, 2024, NCB has introduced new interest rates, increasing rates for term deposits of 6 months or more by 0.1-0.2 percentage points, while reducing rates for 1-month deposits by 0.1 percentage point. Specifically, the bank now offers an interest rate of 3.1% per annum for 1-month deposits, maintains 3.4% for 3-month deposits, and has increased rates to 4.55% and 5.1% for 6 and 12-month deposits, respectively.

Similarly, Bac A Bank (BAB) has raised interest rates for all terms by 0.15-0.5 percentage points. As a result, their 1-month deposit rate has increased to 2.95% per annum, 3-month deposits now earn 3.15%, 6-month deposits have increased to 4.5%, and 12-month deposits offer a rate of 5.1% per annum.

VIB has also joined the trend, raising interest rates for 1 and 3-month deposits by 0.1 percentage points to 2.5% and 2.7% per annum, respectively. Their 12-month deposit rate has seen a more significant increase of 0.3 percentage points, now standing at 4.8% per annum. However, for terms exceeding 12 months, VIB has lowered the rate by 0.1 percentage points to 4.8%.

Effective from May 6, 2024, Sacombank (STB) has also increased interest rates for all terms, except for the 3-month deposit, which has been reduced to 2.8% per annum. Their new rates for 1, 6, and 12-month deposits are now 2.3%, 3.8%, and 4.7% per annum, respectively.

Contrarily, some banks have opted for a slight reduction in deposit rates. Vietbank (VBB), effective from April 17, 2024, has decreased rates for all terms by 0.1 percentage points. Eximbank has followed a similar path, reducing rates for 1 to 3-month deposits but increasing rates for 6 to 9-month terms.

State-owned banks such as Vietcombank, VietinBank, BIDV, and Agribank have maintained their interest rates without any adjustments during this period.

As of May 7, 2024, personal savings deposit rates offered by banks for terms of 1 to 3 months range from 1.6% to 3.4% per annum, while 6 to 9-month deposits attract rates between 2.9% and 4.8%. For longer-term deposits of 12 months, rates offered by banks are generally within the range of 4.8% to 5.1% per annum.

For 12-month deposits, NVB, VBB, and BAB are currently offering the highest interest rate of 5.1% per annum, closely followed by KLB, SGB, and LPB, all providing a competitive rate of 5%.

When considering 6-month deposits, NVB takes the lead with an interest rate of 4.55% per annum, while BAB offers a slightly lower rate of 4.5% for the same term.

For shorter-term deposits of 3 months, NVB again stands out with a rate of 3.4% per annum, followed by VBB, which offers a competitive 3.3% for the same term.

Personal Savings Deposit Rates at Banks as of May 7, 2024

Among foreign banks operating in Vietnam, as of May 7, 2024, Public Bank offers the highest interest rate for 12-month deposits at 5.1% per annum. For 6-month deposits, CIMB and Public Bank maintain their leading position with a competitive rate of 4.2% per annum.

Personal Savings Deposit Rates at Foreign Banks as of May 7, 2024

Experts predict that this upward trend in interest rates will continue throughout the year. Associate Professor, Dr. Dinh Trong Thinh, a well-known economist, believes that the State Bank of Vietnam (SBV) is unlikely to raise its base rate, as this could lead to higher lending rates and potentially hinder economic growth.

Following the government’s directive, the SBV aims to maintain low lending rates, which requires keeping deposit rates at a relatively low level. Therefore, we may witness further increases in deposit rates, particularly for longer-term deposits of 1 year or more, as these tend to have better liquidity and are considered core funds for banks.

Associate Professor, Dr. Nguyen Huu Huan, a lecturer at the University of Economics in Ho Chi Minh City, attributes the rising interest rates to exchange rate pressures. The SBV has had to make adjustments to avoid a situation where USD interest rates exceed those of VND, which could create significant pressure on the exchange rate. With intense pressure on the exchange rate recently, the SBV has had to gradually increase interest rates to discourage foreign capital outflows and curb currency speculation.

This trend of increasing interest rates is expected to persist in the long term. Additionally, with economic growth rebounding, the SBV’s reduced money supply, and increasing credit growth leading to tighter bank liquidity, interest rates are bound to rise. Maintaining excessively low-interest rates could have adverse effects on the exchange rate and macroeconomic stability, potentially leading to a return of inflation and other issues.

It is important to understand that low-interest rates cannot be sustained to stimulate growth while also maintaining a stable exchange rate. There is a trade-off between the two, and in the current scenario, we may have to accept slightly higher interest rates to achieve stability. Therefore, we can anticipate a gradual increase in interest rates as a general trend this year to curb inflation and stabilize the exchange rate.

In contrast, a recent report from Shinhan Bank suggests that the SBV is likely to maintain its accommodative monetary policy to support economic growth. Despite a significant decline in foreign exchange reserves and mounting pressure on the USD/VND exchange rate, the SBV is expected to approach future interest rate cuts with caution.

Although faced with various risk factors, such as rising international oil prices and food prices driven by climate change, it is unlikely that the SBV will deviate from its current monetary policy stance.

Cát Lam

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