Interest rates for short-term deposits had
remained high for a long time before being adjusted lower than those for
medium- and long-term ones.
Economists
say the adjustments are appropriate as both inflation and interest rates are
following a downward trend. Against this background, it is expected that banks
will be able to mobilize medium- and long-term deposits.
Interest rates continue falling?
Along
with lowering the ceiling deposit interest rate by 2 percent to 9 percent, the
State Bank of Vietnam has also decided to cut various managing rates of
interest by 1 percent such as discount and refinancing rates to 9 percent and
11 percent, respectively. Open market operations (OMO) interest rates are also
likely to drop to 10 percent from the current 11 percent.
Trinh
Nguyen, an economist of the Hongkong-Shanghai Banking Corporation, says it
seems a bit hasty but necessary to slash interest rates to 9 percent at
present.
There
is hope that inflation will fall to below 5 percent in October.
Although
the 2 percent reduction in deposit rates is part of the Government’s effort to
help businesses, lending rates remain very high at 15-17 percent per year,
which makes it difficult for them to access capital resources, she notes.
“With
inflation pressure easing off on account of low demand and falling prices of
oil and petrol, we predict that the SBV will continue cutting OMO interest
rates by another 2 percent,” Trinh says.
In a
recent strategic report released by the Bao Viet Securities Company (BVSC),
their experts also estimated Vietnam’s inflation rate at around 8-9 percent in
2012.
This
will be a favourable condition for the SBV to persist in loosening monetary
policies in support of economic growth and lower interest rates, they said,
adding that the SBV will consider continue lowering interest rates but ensuring
real positive interest rates for depositors.
Opportunities for capital restructuring
In
response to the SBV’s decision, many commercial banks have raised deposit rates
for the above-12-month term to 10-12 percent while maintaining those for the
one-to-12-month term at 9 percent.
Asia
Commercial Bank is offering depositors 10.4-12 percent for their 12-36-month term,
much higher than the current rates of 9 percent, while Saigon Commercial Bank
is paying depositors 11-12 percent per year to their 13-36-month deposits.
Major
banks such as the Joint Stock Commercial Bank for Foreign Trade of Vietnam
(Vietcombank) and the Bank for Investment and Development of Vietnam (BIDV) are
also offering 9.5-10 percent to their long-term depositors.
Deputy
Director of a major commercial bank in HCM City attributes the adjustments to
banks’ concerns that the medium- and long-term deposit rates will be likely to
increase in the future if the inflation comes back.
This
move will also help banks increase their medium- and long-term deposits and
avoid unnecessary competitions, he says.
Economist
Nguyen Thi Mui, director of the human resource training and development school
of the Vietnam Joint Stock Commercial Bank for Industry and Trade, says the
adjustments are in line with the current macroeconomic trend.
As
commercial banks have to use 30-40 percent of short-term deposits to provide
medium- and long-term loans, she argues, they would rather raise interest rates
for medium- and long-term depositors.
VOV
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