Deposit interest rates continue to decline

14:44 | 26/03/2015 Economy

A series of commercial banks have dropped their deposit interest rates on the Vietnamese dong to reduce costs while credit activities remain sluggish.

Deposit interest rates continue to decline

Low inflation and abundant liquidity have contributed to cutting interest rates

Interest rates dropped

Since the beginning of March, the Vietnam Technological and Commercial Joint Stock Bank (Techcombank) has reduced its deposit interest rates for the Vietnamese dong on one, two and three-month terms to 4.3, 4.44 and 4.43 percent per year, respectively. The bank’s highest interest rate has been set at 6.36 percent per year for a 24-month term. In addition, the Vietnam Bank for Agriculture and Rural Development (Agribank), the Vietnam Export-Import Commercial Joint Stock Bank (Eximbank) and Dong A Bank have also dropped their deposit interest rates across several terms. Meanwhile, the Saigon Commercial Bank (SCB) has applied deposit interest rates of 5 percent for a one-month term and 7.05 percent for a 12-month term.

The Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) has reduced its interest rates by 0.1 percent per year for some terms. The current interest rates of 4.8, 5, 5.1 and 7.7 percent have been applied for four, five, six and twelve-month terms, respectively.

According to commercial banks, deposit interest rates in the Vietnamese dong have been reduced due to low inflation and abundant bank capital.

Statistics from the State Bank of Vietnam’s Representative Office in Ho Chi Minh City show that by the end of February, total deposits of 12 commercial banks headquartered in the city reached more than VND785 trillion, meaning that leisured capital is flowing into banks despite the fact that interest rates continue to fall.

A declined consumer price index (CPI) and lower inflation in the first two months of this year helped commercial banks cut interest rates. February’s CPI reduced by 0.05 percent compared to the previous month. Meanwhile, core inflation increased by a mere 2.31 percent on the same period last year. According to experts, this year’s inflation could reach around five percent. Together with deposit interest rates of 6.5-7 percent for a 12-month term, depositors can enjoy the benefits.


According to the Hong Kong and Shanghai Banking Corporation (HSBC)’s latest survey, Vietnamese inflation will likely fluctuate less than one percent over the next five months. Together with interest rates through open market operations (OMO) of five percent, the real interest rate has reached its highest level since 2009, providing opportunities for the state bank to cut interest rates, boost consumer demand and strengthen investment.

Some regional countries have also cut interest rates to stimulate economic growth. For example, the Bank Indonesia has dropped its interest rate by 25 points to 7.5 percent. Vietnam has had the highest interest rates in the world, therefore, a reduced interest rate is necessary to help businesses easier access to capital.

Although the ceiling deposit interest rate allowed by the State Bank of Vietnam stands at 5.5 percent per year, many commercial banks are raising capital at a lower level of around four percent per year. Experts say that the low inflation and abundant liquidity are opportunities for banks to cut interest rates. According to the State Bank of Vietnam, medium and long-term interest rates may fall by 1-1.5 percent per year by the end of this year. 

By Do Ngoc