Interest rates drop like never before

While Vietcombank reduced deposit interest rates to 6%/year, many other banks simultaneously reduced lending interest rates.

Vietcombank pioneers in reducing deposit interest rates (source baohaiquan.vn)

Vietcombank pioneers in reducing deposit interest rates

Last weekend, the market was abuzz with news that Vietcombank had unexpectedly lowered its deposit interest rate to 6%/year, an unprecedented sharp decrease during this period. This was the second consecutive time that this bank took the lead in reducing interest rates even though the State Bank had not yet made any move to reduce the deposit interest rate ceiling.

Specifically, according to the newly adjusted listing schedule, the ceiling interest rate for VND deposits for 1-month terms is 6%/year, 2-month terms is 6.5%/year and 3-month terms is 6.8%/year. For 6-9-month terms, the ceiling interest rate applied is 7%/year, down 0.5%/year compared to the previous adjustment.

The largest adjustment margin this time is 1%/year for terms of 12 months or more with a ceiling interest rate of 8%/year. Meanwhile, according to the State Bank's regulations, banks are allowed to negotiate with customers on interest rates for deposits with terms of more than 12 months without applying the ceiling of 7.5%/year.

With two consecutive adjustments in less than a month (the previous adjustment was on April 16, 2013), Vietcombank's lowest mobilization interest rate since May 6, 2013 is only 6%/year, lower than the ceiling rate set by the State Bank by a record of 1.5%/year.

Up to this point, Vietcombank is still the only bank that has reduced its deposit interest rates. Other banks are still attracting deposits from the public at a common interest rate of 7.5%/year for terms under 12 months. For terms over 12 months, Bac A Bank is leading with an interest rate of 11%/year. For this term, other banks apply rates in the range of 9%-10%/year.

Although only Vietcombank has announced a rate cut, many people believe that a widespread rate cut may be coming soon.

Recently, in the April 2013 macroeconomic report published by the National Financial Supervisory Commission, this agency said that in the coming time, bank interest rates may be reduced by about 2-3%, because inflation is controlled at a low level and credit growth is less than 1.5%.

Another factor is that the liquidity of the banking system is stable and still maintained quite well, lending interest rates on the open market are relatively low, focusing mainly on overnight and 1-week terms with common interest rates from 3-5%.

If interest rates are reduced by a maximum of 3% as predicted by the National Financial Supervisory Commission, interest rates could even drop to 4.5% per year. Thus, Vietcombank’s 6% per year interest rate may not be the “bottom”.

Massive reduction in lending rates

The adjustment to reduce the mobilization interest rate to 6%/year has helped Vietcombank sharply reduce the lending interest rate and become one of the banks with the lowest mobilization and lending interest rates in the market today.

Vietcombank also continues to reduce lending interest rates sharply, accordingly, the normal short-term lending interest rate is now only about 10.5%/year, especially the medium and long-term lending interest rate for businesses is at least only about 11.6%/year.

Vietcombank also said that the bank is currently applying short-term preferential credit programs with a limit of up to 30,000 billion VND, 700 million USD with the lowest lending interest rates of 7.5%/year and 2%/year to support businesses in the current difficult period.

Meanwhile, although deposit interest rates have not been reduced, many banks have massively launched many programs to reduce lending interest rates to promote credit growth.

At the end of April, Vietnam Joint Stock Commercial Bank for Investment and Development (BIDV) implemented a Business Loan program, Fast Disbursement, Competitive Interest with many attractive incentives from now until July 10, 2013 for individual customers and production and business households when borrowing at BIDV.

Accordingly, BIDV offers customers loans at an attractive interest rate of 9%/year in the first 3 months for loans disbursed during the program's effective period.

In addition, customers borrowing for production and business will immediately receive a 20% discount on BIC – Binh An insurance premiums from BIDV Insurance Corporation (BIC). The loan source for this program is very large, up to 7,000 billion VND.

In addition, BIDV also applies an interest rate of 10%/year for customers borrowing to buy houses.

Since December 10, 2012, Ocean Commercial Joint Stock Bank (OceanBank) has launched a short-term VND loan product with super low interest rates, only 6.8%/year, lower than the mobilization interest rate. However, only enterprises operating in permitted business sectors, with priority given to enterprises borrowing capital to meet capital needs for a number of economic sectors and areas that need to be encouraged according to the orientation and regulations of the Government and the State Bank, can access this source of capital.

An Binh Commercial Joint Stock Bank (ABBANK) has launched a VND500 billion support package with a preferential interest rate of 9.9%/year. This is the most attractive incentive package ever offered by ABBANK to individual customers. This VND500 billion preferential credit package for individual customers will be implemented for 04 lending products of ABBANK: Loans for buying/building/repairing real estate; Loans for buying cars; Consumer loans with mortgages and Loans for production and business.

Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) also has a credit package of up to 4,200 billion VND in preferential loans for individual customers in 2013 with an interest rate of only 9%/year. The lending target of this credit package is relatively wide, from loans for rural development, real estate purchase - construction - repair to loans for staff and production, business and consumption.

Many other banks also apply loan programs with preferential interest rates./.

According to (vov.vn) - LT