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Vietnamese banks cut deposit rates further to boost economic growth

HANOI (XINHUA) – A string of Vietnamese banks have lowered their deposit interest rates further in a move designed to boost lending to shore up growth in the economy, Xinhua quoted a Vietnam News report.

The country’s four biggest lenders, including state-run Agribank and partly-privatised BIDV, Vietcombank and Vietinbank, cut their interest rates between 0.2 and 0.3 percentage points on Vietnamese dong deposits with maturities ranging from six months to one year.

Vietcombank cut its interest rates for six-month and nine-month deposits to 5.8 per cent, and one-year to 7.2 per cent, according to a statement on its website.

Smaller lenders, following in the footsteps of their bigger peers, have implemented rate cuts of up to 0.2 percentage points to between 7.3 and 7.9 per cent on six-month and one-year deposits.

Banks are flush with cash but struggling to boost lending to individuals and businesses on worries over slowing growth tied to a slump in exports and a contraction of the real estate market, experts said.

The State Bank of Vietnam building in Hanoi. PHOTO: AFP

The Central Bank has repeatedly asked commercial lenders to cut operating costs and focus on lowering interest rates to support struggling businesses.

In an attempt to help the country meet its economic growth target for the year, the Central Bank has cut policy interest rates twice since the beginning of the year, with the refinancing rate currently kept at 5.5 per cent, the discount rate at 3.5 per cent and the overnight lending rate in the inter-bank market at six per cent.

Last month, the Central Bank also ordered commercial lenders to restructure loans through June 2024, including delaying loan repayments by up to 12 months for some businesses faced with difficulties amid an economic slowdown. Vietnam’s economy in the first quarter grew 3.32 per cent, the second-lowest quarterly expansion rate since 2011, slowing from a growth of 5.92 per cent in late 2022 and 5.03 per cent in the first quarter last year, the General Statistics Office said.

Vietnam’s gross domestic product is expected to grow 6.5 per cent this year, slower than last year’s expansion of 8.02 per cent.

Meanwhile, inflation pressure is no longer as stressful as last year, as Vietnam’s consumer price index in the first four months rose 3.84 per cent from a year, under the targetted annual inflation rate of 4.5 per cent, according to the Statistics Department.

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