Banks simultaneously reduce deposit interest rates: The Big 4 group leads, focusing strongly on long-term

Simultaneously reducing deposit interest rates

Right in early April, many banks sharply reduced deposit interest rates. In which, the group of 4 state-owned commercial banks including Agribank, Vietcombank, VietinBank and BIDV are at the forefront of the trend of reducing deposit interest rates.

Starting from April 1, 2020, Agribank decreased by 0.1 percentage points for 3-month, 4-month and 5-month terms to 4.7%/year. Interest rates for 6-month, 7-month and 8-month terms are 5.1%/year, down 0.2 percentage points compared to the previous month. Interest rates for 9-month, 10-month and 11-month terms also decreased by 0.2 percentage points to 5.2%/year.

At the bank with the largest asset size in the system, BIDV, the interest rate on savings deposits also decreased in many terms compared to March. In which, interest rates for 3-month and 5-month terms decreased by 0.25 percentage points to 4.75%/year; 6-month and 9-month terms decreased by 0.2 percentage points to 5.1%/year.

In addition to short terms, BIDV also reduces deposit interest rates for deposit terms of more than 12 months. Accordingly, deposits at terms of 13 months, 15 months, 18 months, 24 months and 36 months are only subject to an interest rate of 6.6%/year instead of 6.8%/year in March.

Similarly, VietinBank also adjusted to reduce deposit interest rates for some deposit terms of 3 months or more. In which, deposit terms from 3 to less than 6 months are subject to an interest rate of 4.7%/year. decreased by 0.1 percentage points; terms from 6 months to less than 12 months enjoy an interest rate of 5.1%/year, down 0.2 percentage points.

At Vietcombank, deposit interest rates for most terms of 3 months or more have been adjusted down compared to March. Accordingly, 3-month term deposits are entitled to an interest rate of 4.7%/year, down 0.1 percentage points; 6 and 9 month terms are subject to an interest rate of 5.1%/year, down 0.2 percentage points. Term deposits at 12 months enjoy an interest rate of 6.6%/year, down 0.2 percentage points.

Notably, Vietcombank sharply reduced deposit interest rates with terms of 36 months, 48 months and 60 months at the same time when applying an interest rate of 6.5%/year, down 0.3 percentage points compared to the previous month.

In addition to state-owned banks, private joint-stock commercial banks also simultaneously reduced deposit interest rates, especially banks with the advantage of cheap capital from demand deposits such as Techcombank, ACB, VPBank...

According to the interest rate schedule applied from April 3, the highest interest rate in the form of savings at Techcombank's counter decreased to only 6.5%/year from the previous 7.1%. At the same time, the deposit interest rate applied to all terms over 12 months decreased by 0.1-0.6% compared to March.

At ACB, deposit interest rates at all terms were adjusted down with a decrease of 0.3 – 0.55 percentage points since April 6. In which, the highest interest rate decreased from 7.8%/year in March to 7.35% (applicable to deposits of VND 10 billion or more, at terms of 18.24 and 36 months, interest paid at the end of the period).

Similarly, the highest deposit interest rate at VPBank in April also decreased from 7.9% to 7.3% (applicable to 36-month terms with deposits of 50 billion VND or more). In addition, interest rates for terms over 12 months also dropped sharply by 0.5 – 0.6 percentage points compared to March; while the interest rate applied to deposits with terms of less than 12 months decreased by about 0.1 – 0.2 percentage points.

At small-scale banks such as VietCapital Bank, VietABank or NCB, deposit interest rates also decreased by 0.1 – 0.6 percentage points depending on the term. In particular, the downward correction trend is mainly focused on long terms over 12 months.

Banks are "running" capital

According to analysts, the downward trend of deposit interest rates is understandable in the context of banks facing difficulties in lending activities due to the impact of the COVID-19 pandemic.

Data from the General Statistics Office (GSO) shows that as of March 20, 2020, the credit growth of the whole industry was only about 0.68% while the same period last year increased by 1.9%, showing that credit demand is weak due to many difficulties for businesses. production and business activities must be reduced.

In fact, leaders of large banks also expressed concern about the difficulty of lending in the first months of the year.

At the 2020 Annual General Meeting of Shareholders, BIDV Chairman Phan Duc Tu said that in the first 2 months of the year, the bank's credit balance decreased by nearly 2%. According to Mr. Tu, this decline is "in line with the trend" due to seasonality and the very strong impact of the COVID-19 epidemic from both the supply and demand sides.

Chairman of the Board of Directors of Vietcombank Nghiem Xuan Thanh also said that in the first 2 months of the year, the bank's loan growth was only approximately the general figure of the whole industry (0.1%) and is continuing to promote stronger lending.

According to Mr. Thanh, the COVID-19 epidemic also affects business activities, indirectly affecting the loan demand of this group of customers. Besides, the first months of the year are also the time when people have little need to borrow money.

 "Limited credit output and interest income are under sharp downward pressure, banks need to reduce capital mobilization costs to ensure profit targets," said SSI Securities Research Department.

In addition, the trend of reducing deposit interest rates of banks is also more or less affected by the reduction of the SBV's policy interest rate.

Accordingly, from March 17, the SBV will reduce a series of operating interest rates from 0.5 to 1%/year and lower the ceiling of interest rates on term deposits of less than 6 months. Accordingly, banks have reduced short-term deposit interest rates and many banks have also reduced long-term deposit interest rates from 0.1 - 0.3%/year.

According to Mr. Pham Thanh Ha, Director of the Monetary Policy Department, the reduction of operating interest rates, including the refinancing interest rate and the OMOs offer rate, signals the SBV's readiness to support credit institutions when it is necessary to access capital.

According to Vietnambiz.vn