Several commercial banks yesterday began lowering their deposit interest rates by 0.2 percentage points to 11 per cent per year in compliance with an agreement made between the Vietnam Banking Association (VNBA) and the State Bank of Vietnam.
The agreement, which took effect yesterday, requires banks to cut interest their rates to no more than 11 per cent, instead of 11.2 per cent. The move is designed to get banks to cut capital input costs as well as help enterprises access credit.
Asia Commercial Bank was the first bank to apply the new interest rate on 36-month deposits. Interest rates for one-week to 24-month deposits now range from 9.9 to 10.88 per cent per year, but the bank is also offering depositors a cash bonus equal to 0.15 per cent of their primary deposit.
Late yesterday afternoon, Sacombank, Habubank, Eximbank, SeABank, and HDBank got in line, cutting deposit interest rates by 0.2-0.3 percentage points to 11-11.1 per cent per year.
HDBank acting general director Nguyen Huu Dang said that if depositors expected high returns, lowering the interest rates offered on deposits would not enable banks to absorb excess capital.
Expressing a similar concern that capital would be directed away from banks and towards higher-yield investments, the deputy director of a HCM City-based bank said, on condition of anonymity, "We must comply with the agreement. However, banks may become involved in a promotional war to attract depositors if new interest rates do not meet customer expectations."
VNBA general secretary Duong Thu Huong said that further interest rate cuts would be executed with prudence with respect for market behaviour and the depositor expectations as inflationary pressures continued to grow during the final months of the year.