Local Banks May Slash Deposit Interest Rates
Many joint stock commercial banks in Vietnam plan to cut deposit interest rates to deal with excessive capital accumulated as a result of the central bank's bid to curb inflation, a meeting held August 6 in HCM City heard.
As many as 15 members of the Vietnam Bank Association (VNBA) have already reduced interest rates on deposits of all terms, said Duong Thu Huong, the VNBA General Secretary at the meeting.
Given strong liquidity of commercial banks and slow CPI growth in July, it is necessary to slash deposit interest rates in a move to help banks minimize input costs, which is an important basis for lending interest rate decrease, Huong added.
Huong also affirmed the association will not offer any ceiling interest rates to its members, who are encouraged to work out their own flexible interest rate reduction plans.
So far most of businesses have been reluctant to apply for dong loans with a high annual interest rate of 21 per cent, especially when businesses usually found it difficult to generate 20 per cent profit.
Last month, the three largest state-run banks – BIDV, Agribank, and Vietcombank, decided to reduce their lending interest rates for both dong and dollar loans.
Total deposits of Vietnamese banks increased 1.65 per cent in July. The total value of outstanding loans in the month rose 0.7 per cent, according to a statement posted on the central bank's website. (Youth)
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