Vietnam: Deposit interest rate forecast to rise by 0.3-0.5 percentage points in 2H22

  • Deposit interest rate in 2H22 might be adjusted up some 0.3 to 0.5 percentage points, experts forecast.
  • According to banking expert Nguyen Tri Hieu, savings interest rates in the remaining months of 2022 will unlikely remain at historic low levels due to higher capital demand and inflationary pressure as well as a fiercer competition from other investment channels such as real estate and securities to attract idle capital flows.
  • Sharing the same view, Tran Duc Anh, director of the KBSV Securities Company’s Macroeconomics and Market Strategy Division, said interest rates for long term deposits of large-sized banks would increase by about 0.5 percentage points.
  • The interest rates traded between banks on the interbank market by the end of Apr 22 declined by 0.5-0.7 percentage points per year, but increased again in early May 22. Specifically, the interbank interest rates in early May 22 were 0.1-0.4 percentage points per year higher than the rates at the end of Apr 22 on short terms of less than one month.
  • Not only small-sized banks, but large-sized banks, which previously always kept deposit interest rates at very low levels, have recently also adjusted up their rates as a move to increase the competition in attracting depositors.
  • Analysts from the Saigon Securities Incorporation (SSI)’s research department also said deposit interest rates were under increasing pressure in the wake of rising inflation and stronger-than-expected credit growth.
  • Data of the State Bank of Vietnam (SBV) showed total credit supply as of May 20 reached more than VND11qn, up 7.66% compared to that at the end of 2021 and doubling the figure recorded over the same period in 2021.
  • SBV’s deputy governor Dao Minh Tu said from the beginning of 2022, SBV had guided credit flow towards the production and business sectors as well as prioritised areas, while tightly controlling credit in risky areas.
  • Particularly, a growth of over 8% was seen in credit for sectors facing difficulties such as tourism and hotels, while a 7.6% increase was recorded in industrial sectors and supporting industries.
  • The SBV Deputy Governor said as of the end of Apr 22, more than VND695tr in loans had been given to more than 1.1 million customers
  • Thanks to the strong credit growth, many banks have almost reached the credit quota they were granted at the beginning of 2022.
  • Research by SSI showed an unprecedentedly high credit growth rate was recorded in State-owned banks (up 6.4% since the beginning of 2022), which is a positive sign of economic recovery.

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