Hanoi (VNA) - Many banks haverecently reduced deposit interest rates by 0.2-0.4 percentage points againstearlier this year due to good capital mobilisation amidst the credit slowdown.

VPBank has applied new rates since March 30,lowering its annual interest rates for under-six-month and 12-36 month depositsby 0.2 percentage points.

The bank’s rates for 6-7 month and 8-11 monthdeposits were also reduced by 0.3 and 0.4 percentage points, respectively. 

VIB also cut the deposit rates twice in March.Accordingly, the rate for 1-3 month deposits was reduced by 0.3-0.5 percentagepoints to 5-5.1 percent, while rates for deposits with terms of more than 6months were also slashed by 0.2-0.4 percentage points.

Military Bank also adjusted interest ratesdownwards for short-term deposits by 0.1-0.2 percentage points againstFebruary.

The same move was also seen at State-owned commercialbanks. BIDV, for example, reduced its rate for 1-2 month deposits by 0.2percentage points and 0.1 percentage points for deposits with terms of 364 daysand 13 months.

VietinBank even cut the rates by 0.5percentage points, applying the 4.8 percent rate for six, seven and eight-monthdeposits. However, the rates for long-term deposits of 12-36 months remainedunchanged at 6.8-6.9 percent per year.

According to the National FinancialSupervisory Commission (NFSC), the loan-deposit ratio of the banking system bythe end of March stood at 88.2 percent, higher than the 87.8 percent rate atthe end of last year.

In contrast to forecasts late last year thatbanks’ savings channels will become less attractive as cash flows start toshift to other channels in the context of the stock market continuing toprosper and real estate warming up, the NFSC’s report showed that capitalsavings remains attractive to many people in the first months of the year.

Capital mobilisation of the banking system inthe first quarter of this year rose 3 percent against 2.6 percent in the firstquarter of 2017, while credit growth slowed down to 3.5 percent against 4.3 percentin the same period last year, according to the NFSC’s report.

A recent survey of the State Bank of Vietnam’sMonetary Forecasting and Statistics Department also showed that creditinstitutions hope the average mobilisation growth in the second quarter of thisyear will be some 4.71 percent, much higher than the first quarter, and theannual mobilisation growth will reach around 16.65 percent, equivalent to thelevels of 2017 and 2016. Notably, credit institutions also expect deposits fromsix months to one year to account for 83-86 percent of the total mobilisationin the second quarter and throughout 2018.

However, the NFSC also pointed out anotherreason for the stable liquidity of the banking system in the first quarter of2018. This stability was partly due to the increase in foreign capitalpurchases by the SBV and the slow disbursement of Government bond capital, the financialwatchdog said.

On the inter-bank market, interest rates alsodropped significantly compared with February. Accordingly, the interest rates of loans in VND fell by 0.47, 0.9and 1.2 percentage points against late last year to 0.83, 0.98 and 1.73 percentfor overnight, one-week and one-month loans, respectively.-VNA