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After a year of significant decreases, saving interest rates began to rise again in mid-April 2024, a trend that continued through August. Some banks even adjusted their rates two to three times within a month. Notably, over 20 banks changed their interest rates in June, with more than half of them doing so twice.
This upward trend showed signs of slowing in September, with only 12 banks increasing their deposit rates. This continued until the first half of November. However, in the past two weeks, the wave of rising saving interest rates has started to spread again.
Since the beginning of November, 14 banks have increased their saving interest rates, including SeABank, BaoViet Bank, HDBank, GPBank, LPBank, Nam A Bank, IVB, Viet A Bank, VIB, MB, Agribank, Techcombank, ABBank, and VietBank. Notably, 13 banks now offer deposit rates of 6% per annum or higher.
Contrary to the trend in saving interest rates, lending rates have remained relatively stable or even decreased in some banks. Many banks have reduced lending rates for production and business loans to 8%-10% per annum, depending on the industry and customer segment. Some preferential loan packages even offer rates below 7% to support small and medium-sized enterprises, export businesses, and priority sectors.
“Observing the actual developments in the banking credit market in the last few weeks of 2024, we can see that many commercial banks are increasing their deposit rates and decreasing their lending rates,” said Dr. Nguyen Hoang Nam, Head of Finance and Banking at Dai Nam University. “At first glance, this may seem unreasonable as it directly affects profit margins. However, this can be understood when considering the empirical perspective.”
Analyzing the recent trend of increasing interest rates, Mr. Nam attributed it to the lack of liquidity among commercial banks, unlike previous instances where inflation or exchange rate fluctuations played a more significant role.
He explained that Circular No. 06/2023/TT-NHNN allows for debt rescheduling for certain borrowers, which means that instead of funds returning to the system for banks to relend, they remain in the economy.
“It is also worth mentioning that the turnover of the Vietnamese dong is still low compared to other currencies of similar economies. I believe this trend will soon end, and there won’t be a race to increase interest rates in the final weeks of this year,” Mr. Nam added.
Commenting on lending rates, Mr. Nam said, “In contrast to deposit rates, many commercial banks are lowering their lending rates to boost lending. Recently, there has been talk about the VND 670,000 billion credit balance that the system needs to lend to achieve the 15% credit growth target.”
According to Mr. Nam, commercial banks are always ready to lend to eligible borrowers who meet the lending conditions. As a principle, they will not dare to lend below the standard. As the year draws to a close, the pressure to fill the credit room increases, as it will affect next year’s business plan. This is the essence of the issue, and that is why lending rates are trending downward.
“In reality, banks will have their own methods to meet this target on the day the regulator closes the room. So, a 15% credit growth does not mean that the economy will receive the full VND 670,000 billion. Even in this case, if the goods and services produced are consumed domestically and exported, ensuring a balance of money and goods, it will not put inflationary pressure.
In conclusion, the dynamics of deposit and lending rates of many commercial banks are quite ‘normal’ and will end in the last week of the calendar year,” the expert added.
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