Major banks drastically cut deposit interest rates.

Two major banks, Vietcombank and Agribank, unexpectedly sharply reduced their 1-month deposit interest rates to 5% per year. Meanwhile, the general market rate remained at 6.5% - 7% per year.

Money continues to flow into banks despite falling interest rates. (Illustrative image from the internet)

Vietcombank (Vietnam Foreign Trade Bank) has just adjusted its deposit interest rate for one-month terms down to 5% per annum, a decrease of 1% compared to the previous rate. This rate is also significantly lower than the current ceiling interest rate of 7% applied in the market for deposits from one month to less than six months.

According to Vietcombank's listed interest rates, interest rates for terms from 2 to 9 months still range from 6.5% to 7% per year. Meanwhile, the interest rate for demand deposits remains at a maximum of 1.2% per year.

This is not the first time this bank has adjusted deposit interest rates downward. Back in early May, Vietcombank also led the wave of sharp reductions in deposit interest rates, unexpectedly announcing that the interest rate for 1-month deposits would be reduced to 6% per year.

Along with Vietcombank, among state-owned commercial banks, Agribank now also applies a deposit interest rate of 5% per annum for a 1-month term.

Thus, with the aggressive cuts in deposit interest rates by the two major banks, Vietcombank and Agribank, whether the market will experience a sharp decline in input interest rates in the near future remains an open question.

According to the listed interest rates of BIDV and Vietinbank, the interest rate for a 1-month term is currently being applied by these two banks at 6%/year and 6.5%/year, respectively.

According to experts, along with the State Bank of Vietnam's decision to lower the ceiling on short-term interest rates for terms from 1 to less than 6 months to 7% per year and remove the ceiling on interest rates for terms of 6 months or more, banks' capital mobilization activities are still proceeding normally. In particular, with signals of interest rate cuts occurring in the market, removing the ceiling on deposit interest rates may be implemented in the near future.

Data from the State Bank of Vietnam shows that deposit interest rates for terms from 1 month to less than 6 months at state-owned commercial banks and some large joint-stock commercial banks are lower than the maximum interest rate for Vietnamese Dong deposits as stipulated by regulations.

Currently, deposit interest rates offered by state-owned commercial banks are commonly as follows: 1-1.2% per year for demand deposits, 5-6.8% per year for deposits from 1 month to less than 6 months, approximately 7% per year for deposits from 6 months to less than 12 months, and approximately 7.5-8% per year for deposits over 12 months.

For joint-stock commercial banks, common interest rates are 1.2% per year for demand deposits; 6.5-7% per year for terms from 1 month to less than 6 months; approximately 7-8% per year for terms from 6 months to less than 12 months; and approximately 8.5-9% per year for terms over 12 months.

According to HNMO - TH