HANOI: Interest rates on the interbank market, the open market operation (OMO) channel, and commercial banks are all down after the State Bank of Vietnam (SBV) cuts several policy interest rates.
The SBV cut its policy rate by 50 to 100 basis points on March 15 to support economic growth and stabilise the monetary market.
Accordingly, the discount rate has been reduced from 4.5% per year to 3.5% per year, while the overnight electronic interbank rate and interest rate for loans to offset capital shortages in clearance between the central bank and commercial banks have also decreased from 7% to 6% per year.
After the SBV’s move, interest rates in the interbank market declined significantly.
And the average overnight interbank lending interest rate on March 15 decreased to around 5% per year from 5.72% the previous day and 6.22% at the end of the previous week.
Interest rates for one-week, two-week and one-month terms in the interbank market dropped sharply to 4.14%, 4.29% and 6.35% per year, respectively. Compared to the end of the previous week, interest rates for the terms decreased by 0.5 to 1.8 percentage points.
On the OMO channel, the interest rate of winning bids in trading sessions on March 15 and 16 also decreased to 5.5% per year after staying for a long time at 6% per year.
Interest rates listed at commercial banks have also adjusted down after the SBV’s move.
The four largest state-owned banks – Vietcombank, BIDV, Agribank and VietinBank – have simultaneously cut their rates by 0.2 percentage points to 7.2% per year for long-term deposits since March 15.
Besides the rate cut for long-term deposits, banks have also reduced the rate for short-term deposits.
Nam A Bank and DongABank, for example, have adjusted the rate for deposits with terms of less than six months by 0.5 percentage points to 5.5% per year, far from the SBV’s regulated cap of 6% per year since March 17.
After several interest rate reductions by commercial banks, only ABBank currently lists an interest rate of 9.1% per year for 12-month deposits, and three banks, including BaoVietBank, OceanBank and SCB, list a 9% rate for 12-month savings.
The remaining banks’ interest rates are all under the threshold of 9% per year for 12-month deposits, while a rate of more than 10% per year was popular in the market early this year.
According to Tran Ngoc Bau, chief executive officer of financial data provider Wigroup, the SBV’s move shows that it has taken its first steps to resume its loose monetary policy after a long-held tightening policy.
“The government has decided to prioritise economic growth as the country’s gross domestic product has been showing signs of a slowdown, he said.
Analysts from VNDirect Securities Company forecast deposit interest rates to peak in the first quarter of 2023 and then gradually decrease from the second quarter.
“We expect six-month and 12-month deposit interest rates to gradually reduce to 6.7% and 7.5% by the end of 2023,” the analysts said in a recent report. — Viet Nam News/ANN