VietNamNet Bridge – At the beginning of December some banks cut deposit interest rates by 0.1-0.2 percentage points.
The Bank of Investment Development of Viet Nam (BIDV) reduced the interest rate on non-term deposits from 0.3 per cent to 0.2 per cent, and on 36-month deposits, from 7 per cent to 6.8 per cent.
The Agriculture and Rural Development Bank cut its non-term deposit interest rate from 0.5 per cent to 0.3 per cent.
The Sai Gon Thuong Tin Joint Stock Commercial Bank (Sacombank) reduced the interest on short-term deposits by 0.1 percentagage point.
But analysts believe not all banks will buy into this trend, with some thinking that the interest rates might even go up later this month and in the early part of the new year.
They said the interest rates are beginning to come under relentless pressure since the dollar has started to appreciate strongly after the US Federal Reserve (FED) recently increased interest rates and indicated more rate hikes are to come.
This is likely to encourage people to shift from the dong to the dollar, which will threaten banks’ đong liquidity.
Thus, many banks have plans to increase deposit interest rates to improve their liquidity since lending activities usually surge now, the year’s peak business season.
The liquidity is also affected by other factors.
By November, the banking sector’s credit growth rate reached 15.8 per cent.
This means that to realise the year’s credit growth target of between 18 and 20 per cent, banks would have to accelerate mobilisation of deposits to ensure they have enough liquidity to fund their lending.
The analysts said bad debts have also had an impact on interest rates.
According to the State Bank of Viet Nam, since 2013 the Viet Nam Asset Management Company (VAMC) bought bad debts totally worth VND262.054 trillion (about US$11.65 billion) from banks, but has recovered only VND37.938 trillion ($1.67 billion), or just 15 per cent.
This has a lingering impact on the financial ability of many credit institutions.
Besides, new bad debts continue to plague some of the banks.
BIDV, for instance, in the first nine months of this year reported bad debts of VND13.217 trillion ($587.42 million), or 1.96 per cent of its outstanding loans.
Notably, irrecoverable debts increased to VND7…
Vietnam: Manufacturing to remain the key driver of growth
We expect robust exports, led by strong global demand for electronics, to continue to underpin solid economic growth over the remainder of this year with GDP forecast to rise close to 8%.
GDP growth was unchanged at 4.5% y/y in Q1. Manufacturing activity surged, while the recovery in service sector activity and construction continued albeit at a more subdued pace as some localised social distancing measures were reinstated.(more…)
Subscribe via Email
3 ways Asia can recover from the COVID-19 pandemic faster
Countries in the East Asia and Pacific region will benefit from cooperation in three major areas: vaccine deployment, reviving sectors...
Thailand’s Vaccine Strategy: What went wrong?
Questions are being asked, and not answered, over the decision to rely almost entirely on Siam Bioscience, a local, palace-owned...
Exclusive interview with Richi Kukreja, HR Lead Director for Zoetis South East Asia
Zoetis is a global animal health industry leader, dedicated to supporting customers and their businesses in ever better ways. Building...
World Bank lowers Thai GDP growth outlook to 2.2%
In the Thailand Economic Monitor released today, the World Bank adjusted its outlook on Thailand’s economic growth this year to...
The Importance of E-Wallets for Online Gaming Sites
With e-wallets and cryptocurrency being the most relevant options, banks have been put on the side burner, especially when e-wallets...