Only a few banks now offer more than 5% per year for deposits of 12 months or less, with the highest rate at 5.7%.

Sixteen of the country’s banks lowered deposit interest rates this month, with most cutting rates for deposits of up to 12 months by 0.15-0.4 percentage points during the runup to Tet.

After Tet Dong A Bank and NCB followed suit.

NCB, VIB and Sacombank have cut the rate twice.

Only 10 lenders offer over 5% for short-term deposits now.

SeABank has the highest rate of 5.7%.

But in the case of deposits of 15-24 months or longer, more than 20 banks still offer more than 5%.

HDBank has the highest rate of 6.2% for 15-month deposits.

The interest rate gap between private and state-owned banks has narrowed significantly to just 1-2 percentage points.

Many private lenders such as VIB, MSB, ABBank, and Techcombank even offer lower rates than the state-owned banks.

Foreign banks have the lowest rates, with only Shinhan Bank and CIMB being on a par with their domestic counterparts.

The fall in rates to historically low levels is due to banks having too excessive liquidity, according to the deputy director of a state-owned bank.

The relentless inflows into banks despite the huge interest rate cuts is concerning since this means capital is not flowing into production and investment, the executive said.

Since credit demand is unlikely to rise at anytime soon the deposit interest rates would remain low until at least the middle of 2024, they speculated.

This year the State Bank of Vietnam has set a credit growth quota of around 15% for banks.

But with credit growth being relatively low this year compared to previous years, it had asked banks to come up with more measures to boost it.

Quynh Trang (Source: e.vnexpress.net)