It can be said that deposit interest rates at commercial banks are now stable without variation compared to the time before Tet. Some commercial banks increased their deposit rates slightly by 0.1-0.3% per year, which did not reflect the general trend of the market.
A bank official said that with the flexible monetary policy of the State Bank of Vietnam (SBV), particularly the implementation of open market operations to ensure the liquidity of the credit institution system in late 2016, the monetary market and interest rates were kept stable.
The deposit interest rates now stand around 0.8%-1% per year for non-term deposits and deposits with a term of less than one month; 4.5-5.4% per year for deposits with a term of one month to less than six months; 5.4-6.5% per year for deposits with a term of six months to less than 12 months; and 6.4%-7.2% per year for deposits with a term of over 12 months.
Meanwhile, lending interest rates are hovering around 6.8-9% per year for short-term loans, 9.3-11% per year for long-term loans; and 6-7% per year for prioritised sectors.
Deposit interest rates in Vietnamese dong are not as high as expected by most depositors, but this is considered a safe investment channel with clear profits and low risk. In the context of stable gold prices and stock markets but unpredictable real estate, savings are still a good investment channel.
According to the State Bank, it will continue to carry out monetary policy in a synchronous manner to regulate liquidity and interest rates in accordance with developments in the macroeconomy. In addition, the State Bank asks credit institutions to balance their sources of capital, cut costs and enhance business efficiency to reduce lending interest rates in order to share difficulties with lenders.
On top of the tasks of stabilising interest rates and lowering lending interest rates, commercial banks have been put under pressure to reduce costs and hasten restructuring along with settling non-performing loans.
Economist Le Xuan Nghia said that there is room for lowering lending interest rates in 2017, which will largely depend on the credit policy of the State Bank and the settlement of non-performing loans by commercial banks.
Vietcombank Deputy General Director Pham Thanh Ha said that stabilising interest rates in 2017 will require considerable effort from commercial banks amid inflation and the rise anticipated in interest rates in US dollars.
Ha stated that there will be room for Vietcombank to stabilise and reduce interest rates, particularly short-term lending interest rates for prioritised sectors and start-up businesses as the bank has resolved, and controlled non-performing loans.
Many economists have said that it is hard to lower lending interest rates in the condition of stable deposit interest rates in addition to objective factors from the domestic and world economy. As a result, maintaining stable interest rates as in 2017 will see a number of challenges including the possibility of inflation increasing in 2017, the anticipated rise in interest rates in US dollars and pressure from non-performing loans and restructuring from weak banks.
Particularly, the SBV’s regulations on the ratio of short-term funds used for medium- and long-term loans effective from January 2017 will force commercial banks to boost deposits. In addition, non-performing loans have yet to be resolved completely, resulting in higher provision and operation costs for commercial banks which will affect the possibility of reducing lending interest rates.
Along with the duties assigned by the Government, the State Bank also set the target for the banking system of decreasing lending interest rates by 0.5-1% in 2017, which is not easy to achieve amid enormous pressure from both subjective and objective factors.
