Deposit interest rates are forecasted to continue to decline, and deposits in banks will slow down

3 min read

Deposit rates can be reduced further by 10-30 basis points

In the first two weeks of September, commercial banks continued to reduce deposit rates from 0.1% to 0.4%, focusing on terms from 6 months to less than 12 months.

A group of four major commercial banks, VietinBank, Vietcombank, BIDV and Agribank, reduced deposit rates by 0.2 percent for terms of less than 12 months.

For tenors over 12 months, Vietcombank and Agribank both decreased from 0.2% to 0.3% compared to the beginning of the month.

Mid-range joint stock commercial banks also reduced deposit rates, especially for terms below 12 months.

Previously, the savings interest rate level at commercial banks decreased in August 2020.

The aforementioned major banks reduced deposit rates for 1-month terms from 3.7% to 3.5% / year, 3-month term rates from 4% to 3.8% / year, interest rates for term 9 month from 4.6% to 4.50% / year

Deposit rates have been continuously adjusted to fall sharply recently, which is attributed to the abundant liquidity of commercial banks, while due to the impact of the Covid-19 epidemic, credit growth is quite slow. .

Up to this point, in general, the growth rate of capital mobilization of the whole system is higher than the growth rate of credit, banks have quite a lot of idle capital.

According to the State Bank of Vietnam, the total means of payment (M2 money supply) at the end of July was 11.16 million billion – 5.58% higher than the end of 2019, this increase was much lower than the increase from 7-8% of the same period 3 years earlier.

According to SSI Research experts in a recent report, the SBV’s monetary loosening policy will continue to be maintained, and the liquidity of commercial banks will remain abundant.

The interbank interest rate is forecasted to remain at a low level, and the deposit interest rate may decrease further by 10-30 basis points in the near future.

Deposits in banks show signs of slowing down

The deposit interest rate level tends to decrease, making many people think that the idle money will switch to other investment channels with higher profitability, including the gold investment channel and the stock market.

And the fact also shows that, the source of money savings in banks is also showing signs of slowing down when the deposit interest rates continuously fall deeply.

According to the latest updated figures from the State Bank of Vietnam, by the end of July 2020, customer deposits at credit institutions reached nearly 9.22 million billion, up 4.85% compared to the end of 2019.

Source: SBV

In which, deposits from economic organizations reached over 4.13 million billion dong, up 4.44%; People’s deposits reached more than 5.08 million billion, up 5.2%.

Notably, compared to the previous month, deposit growth of both residential customers and economic entities slowed down in July.

Specifically, residential deposits by the end of July were recorded at VND 5,080 trillion, only up VND 9,868 billion, equivalent to an increase of 0.19% compared to June while in May and June, both recorded growth from 2.24% to 2.32% compared with the previous month.

Similarly, corporate customer deposits, after the first four months of the year plummeted, began to recover strongly in May and June with growth of 4.05% and 4.38%, respectively compared to the consecutive month.

However, by July, deposit growth of businesses in credit institutions also showed signs of slowing down, increasing only VND 4,5016 billion, equivalent to an increase of 0.11% compared to June.

Source: bizlive.vn – Translated by fintel.vn