Hanoi (VNA) - Deposit interest rates at commercial banks will continue to decrease and remain at low levels in the coming months, analysts forecast. In a recent report, Bao Viet Securities Company (BVSC)’s analysts said the average deposit interest rate continued to inch down last month for both 6-month and 12-month terms. Accordingly, the average rates for 6-month and 12-month deposits in October decreased by 0.01 and 0.06 percentage points to 4.70 percent and 5.50 percent against the previous month, respectively. Compared with the same period last year, the average interest rates of 6-month and 12-month deposits declined by about 0.5 percentage points. According to BVSC’s analysts, Vietnam's consumer price index in the first ten months of 2021 increased by only 1.81 per cent, the lowest since 2016. They forecast the index would increase by only around 2.5-3 percent for the whole of 2021. “The low inflation rate would create favourable conditions for the State Bank of Vietnam (SBV) to continually maintain a loose monetary policy with an aim to stimulate the economy for recovery in the last months of the year. Deposit interest rates therefore would continue to remain low in the coming months,” they said. In the context that deposit interest rates hit the lowest levels, the deposit growth at banks is slowing down. According to the SBV, by the end of August, deposits at banks increased by only 4.17 percent compared to the beginning of the year to more than 10.4 quadrillion VND, the lowest growth rate since 2012. Currently, four State-owned banks Vietcombank, VietinBank, Agribank and BIDV and some large-sized banks such as Techcombank and Military Bank are listing the lowest interest rates in the banking system. The highest savings interest rate for 12-month deposits at Vietcombank, Agribank and BIDV is 5.5 percent per year while VietinBank is capping the rate at 5.6 percent per year.

Previously, banks often raced to increase savings interest rates and launched promotional programmes to attract depositors in the last months of a year to meet rising capital demands in the peak business season ahead of the country’s biggest holiday Tet🐻 (Lunar New Year). However, due to the adverse impacts of the COVID-19 pandemic, the savings interest rates have been dropping and remained stable since last year.

Sixteen banks in Vietnam reduced a total of 12.23 trillion VND (536.2 million USD) in interest rates for borrowers affected by the COVID-19 pandemic from July 15 to September 30, equivalent to 59.36 percent of their commitments, according to the SBV.

Accordingly, the Bank for Agriculture and Rural Development of Vietnam (Agribank) cut the largest amount, of 4.88 trillion VND. Loans worth 1.27 quadrillion VND enjoyed interest rate reductions, benefiting over 3.18 million customers.

It was followed by the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) and the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), with 1.97 trillion VND and 1.9 trillion VND cut down, respectively.

♉ Earlier in early July, following the Government’s Resolution 63/NQ-CP and directions of the SBV, through the Vietnam Banks’ Association, 16 commercial banks agreed to cut the lending rates for enterprises hard hit by the COVID-19 pandemic from July 15 until the end of this year, with the total amount of reduced interest of 20.6 trillion VND.

Four State-owned commercial banks committed to provide a support package worth 4 trillion VND to reduce interest rates🦄 and 100 percent of service fees for customers in localities imposing social distancing under the Prime Minister’s Directive 16.

According to the SBV, though banks cut lending interest rates significantly this year, credit increased 7.42 percent in the first nine months of this year. The credit growth is expected to reach 12 percent by the end of the year./.