Just after Vietcombank applied a sharp decrease to their deposit interest rate, three other large banks followed suit.
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| Banks look for credit customers |
On May 8, Agribank lowered their deposit rate to 5% per year for a one month term and 7.5% per year for with terms of less than nine months.
Last week, Vietcombank and BIDV followed by reducing their deposit interest rates for one month term to 6% while Vietinbank set the annual interest rates at 7% for one-month to one-year deposits.
Lowering deposit rates has been seen as a strategy for lowering lending interest rates. Credit growth in the first months of 2013 only grew by 1.4% compared to the end of 2012 while deposit rate increased by 5.34%.
"We should be circumspect regarding any decisions for cutting the deposit rate to less than 7%," said Nguyen Duc Huong, deputy head of Lien Viet Post Bank. "Banks have an excess of capital now, but if interest rates fall too low money will flow into stock market, real estate, gold or foreign currency."
According to the Banking Academy, lower interest rates have not yet shown any adverse effects. And a survey of 479 listed enterprises revealed that 63% were able to handle interest rates as high as 15%.
"We also have a lot of businesses that are in over their heads. These companies would not even be able to pay off their debt if the interest rate was zero," Huong said.
He went on to explain that banks were currently in a rush to find credit customers.
