The Rising Interest Rate Trend: A Boon for Depositors

According to statistics, in August, deposit interest rates for 6-month, 9-month, 12-month, and 24-month terms were adjusted upwards by several banks, with increases ranging from 0.1% to 1.3% depending on the term and the bank. Some banks’ interest rates even surpassed the 6%/year mark, amidst a backdrop of credit growth accelerating threefold compared to the growth rate of mobilized capital. This has prompted banks to raise deposit interest rates to enhance the competitiveness of savings accounts against other investment avenues in the market.

Additionally, data from the State Bank of Vietnam showed that in the second quarter of 2024, deposits from economic organizations into the banking system decreased by 4.66% to VND 6,523 trillion, while individual deposits increased slightly by 1.6% to VND 6,637 trillion.

Meanwhile, credit demand is beginning to recover at a rapid pace, prompting banks to seek ways to ensure balanced capital sources. Specifically, while the first two months of the year saw negative credit growth, by the end of May, total outstanding loans to the economy had surged to 2.41%.

Currently, the trend of increasing interest rates is mainly driven by privately-owned joint-stock banks, while the state-owned ‘big four’ banks, namely Vietcombank, BIDV, VietinBank, and Agribank, continue to maintain historically low deposit interest rates. MBS Securities Joint Stock Company predicts that the 12-month deposit interest rates of large commercial banks will also inch up by 0.7-1% to 5.3%-5.6% in the second half of 2024.

The economic recovery and the signing of numerous deals have led to an increase in deposit interest rates by banks.

Forecasting the overall trend of deposit interest rates from the beginning to the end of the year, Dr. Le Ba Chi Nhan, an economic expert, opined that the second half of the year is always considered the “lending season” for banks. To meet the capital demands, banks must ramp up mobilization efforts to ensure a continuous flow of money in the market. Besides catering to the capital needs of production and business activities, the real estate market, which is expected to reshape and develop in the coming period, will require a substantial amount of funding. As bank capital remains the primary source of financing, deposit interest rates may climb to the range of 6-8%/year between now and the end of the year.

Concurring with this view, experts attributed the interest rate adjustments by banks to the aim of balancing returns with other investment channels, notably the overwhelming performance of gold in the past period. Since the beginning of the year, gold has recorded a yield of over 22%, whereas savings deposits have yielded only about 1.5% (based on the 12-month term). Interbank interest rates will influence the system’s liquidity and determine the rise or fall of deposit interest rates in the retail market.

Currently, the highest deposit interest rate in the market, at 6.1%/year, is offered by five banks, namely NCB and OceanBank (for terms ranging from 18 to 36 months), HDBank (for an 18-month term), and Saigonbank and SHB (for terms of 36 months and above).

Dr. Nguyen Tri Hieu, an economic expert, shared his perspective: “There is a trend of increasing deposit interest rates in the second half of this year, but lending rates will also adjust upwards accordingly. Rising interest rates signify an active economy, where both individuals and businesses are ramping up their borrowing needs. This prompts banks to adjust deposit rates to attract more deposits and meet the burgeoning capital demands of their customers. While increasing interest rates is a strategy to attract new funds and ensure liquidity, it also leads to higher borrowing costs as banks aim to maintain a profit margin of 3-4%.”

Credit growth is expected to witness a more pronounced recovery in line with the economic rebound in the second half of 2024.

The economic recovery, coupled with the signing and fulfillment of large orders, has spurred banks’ capital mobilization efforts, and this momentum in deposit interest rate hikes is expected to extend into the year-end. Specifically, credit growth is anticipated to witness a more pronounced recovery in line with the economic rebound in the second half of 2024, driven by key factors such as a significant increase in import turnover in recent months, indicating positive prospects for the production and export sectors; the permeation of monetary and fiscal policies leading to improved domestic demand; and a reviving real estate market.

In conclusion, the trend of increasing deposit interest rates in the second half of the year has become evident. To maximize their savings, individuals should consider shorter and medium-term deposits, consult experts, and directly inquire at banks to make informed decisions. Individuals’ savings plans may vary depending on their unique financial goals, allowing them to diversify their deposits across different terms for financial flexibility. Notably, online channel deposits often come with an additional 0.1%/year bonus offered by most banks.