Banks cut deposit rates as credit demand dwindles

Vietcombank, the nation’s fourth largest lender by assets, has lowered its deposit interest rates by 0.2-0.3 percentage points for periods of six months or more.

An individual account will now get a 6.6 percent interest rate per annum for a 12-month deposit instead of the earlier 6.8 percent.

The third largest lender in the country, Vietinbank, has lowered its interest rates by 0.2 percentage points to 6.6 percent for terms of six to less than 12 months, keeping the rate for a 12-month fixed deposit unchanged at 6.8 percent.

Top lender BIDV has cut its rates by 0.05-0.2 percentage points for most periods, except for 12-month deposits which is still 6.8 percent.

Mid-sized banks like VPBank, MBBank and ACB have also lowered their interest rates by 0.2-0.7 percentage points to 6-7 percent a year.

The central bank in March reduced the cap on interest rates on dong deposits of one to six months from 5 percent to 4.75 percent.

The cut came as Vietnam recorded a six-year low credit growth of 0.68 percent in the first quarter, with many companies scaling down their business due to the pandemic impacts.

Economist Nguyen Tri Hieu said less credit demand means banks are having high liquidity and therefore less need to mobilize more cash.

However, if the pandemic situation worsens, more companies will need credit to save their businesses and at that time deposit interest rates could rise, he added.

Last month, the central bank lowered its base rates by 0.25-1 percentage point to boost lending.

The government has directed banks to provide VND285 trillion ($12.1 billion) worth of credit at lower interest rates to help businesses affected by the pandemic.