|According to the central bank, as of October 24 deposits had grown by 11.88 per cent this year. Ready for lending interest rate cuts.— Photo zing.vn
HCM CITY (VNS) — Le Ngoc Huong of HCM City's Tan Binh District has decided not to pull out her deposit of VND1 billion from a bank though the interest rate has fallen from 5.6 per cent to 5.1 per cent.
She says she dare not invest the money in anything else because of the high risk involved.
Analysts say most of the idle money remains in banks even after the State Bank of Viet Nam decided to lower the interest rate cap on deposits of less than six month from 6 per cent to 5.5 per cent late last month.
After the move, most lenders including small and medium-sized ones, have slashed their deposit interest rates. Asia Commercial Bank for instance reduced its rates for one- and two-month deposits from 5.3 per cent to 4.9 per cent and for three and nine months to 5.1 and 6 per cent.
Orient Commercial Joint Stock Bank has also cut interest rates on short-term deposits, but this has had no impact on mobilization, according to deputy general director Truong Dinh Long.
"[This] year the bank's deposits have increased by 11 per cent," he told Dau Tu Chung Khoan (Securities Investment) newspaper.
He attributed it to the fact that other asset classes like property, stocks, gold, and foreign currencies are not attractive yet.
With inflation being contained at a rather low level (estimated at 3-4 per cent for this year), depositors enjoy a positive real interest rate even after the rate on short-term deposits was cut to 5.5 per cent and on longer term deposits to 6-8 per cent per year, he said.
Trinh Minh Thao, Techcombank's head of retail banking in the south, concurred, adding that many people now preferred long-term deposits on which rates are 1-1.5 per cent higher than for short terms.
Vietcombank has always taken the initiative in cutting interest rates yet its deposits had increased by 17.67 per cent as of late September, according to its general director Nghiem Xuan Thanh.
Its interest rate now stands at 4.3-5 per cent for one- and three-month deposits and at 6.3 per cent for 24 months, he said.
According to the central bank, as of October 24 deposits had grown by 11.88 per cent this year.
Ready for lending interest rate cuts
After lowering the interest rate cap for short-term deposits, the central bank called on State-owned banks to reduce their lending interest rates for five priority sectors, and lenders have responded positively.
Deputy general director of Vietcombank, Nguyen Danh Luong, said last week his bank had lowered the interest rate on short-term loans to the five priority sectors from 8 per cent to 7 per cent.
"Vietcombank is ready to tweak its profit plans in a way that … also supports businesses."
BIDV general director Tran Xuan Hoang said that in the last three years his bank has always taken the initiative to share businesses' difficulties by cutting loan interest rates though that hit its bottom line.
"In response to the central bank's call, BIDV would continue to adjust lending interest rates."
OCB deputy general director Dinh Duc Quang said he supported the central bank's policy of lowering lending interest rates.
"Though the economy shows signs of recovery, domestic enterprises still face with many difficulties. So, lower lending interest rates would create conditions for the businesses to develop their production and business activities."
Dr. Tran Du Lich, a member of the National Monetary and Financial Policy Advisory Council, said the cut in lending rates, particularly for medium- and long-term loans, would have a positive impact on the economy.
According to HSBC, the cut in the deposit rate cap is part of the central bank's efforts to boost credit growth, which is expected to accelerate by year end. — VNS