Topic: interest rate

At a discussion session on October 28, many National Assembly (NA) deputies said it is necessary to adopt solutions to restore Vietnam’s corporate bond and securities markets as soon as possible, to ease the pressure on credit. In particular, the government needs to closely monitor interest rates at banks, so that sectors carrying out production and business can access credit at an appropriate cost.

After the State Bank of Vietnam (SBV) raised the ceiling interest rate for deposits under six months to 6 per cent per annum, many banks increased their rates from October 25. The highest is at SCB, at up to 9.3 per cent per annum. Analysts have forecast that interest rates will continue to increase over the closing months of the year due to exchange rate pressure and inflation.

Credit institutions continue to expect that deposit and lending interest rates will increase in the fourth quarter. A survey by the State Bank of Vietnam found that 59-61 per cent of credit institutions expect an average interest rate increase of 0.37 percentage points in the quarter.

According to FiinRatings, factors affecting the profits of securities companies include liquidity risk, proprietary trading, interest rates, and exchange rates.

A negative deposit-credit gap and the State Bank of Vietnam’s withdrawal of money have tightened liquidity in the banking system. Interbank VND rates have skyrocketed. The overnight interest rate on October 4 was up to 7.74 per cent per annum, or 2.58 percentage points higher than in the middle of last week. Deposit interest rates are expected to continue to increase in the near future.

The State Bank of Vietnam (SBV) has simultaneously increased the refinancing interest rate to 5 per cent per annum, the rediscount rate to 3.5 per cent per annum, the maximum interest rate for demand deposits and terms of less than one month to 0.5 per cent per annum, and term deposits from one month to less than six months to 5.0 per cent per annum. Rates on overnight loans in interbank electronic payments and loans from the SBV to cover capital shortfalls in clearing payments to credit institutions and foreign bank branches is 6.0 per cent per annum.

In an updated report, Dragon Capital said that in an environment of rising interest rates, expected returns in the stock market are unlikely to be outstanding. In the short term, the market will see many fluctuations depending on developments around the world. However, the influence of external factors on Vietnam is much lower than in emerging countries and is not systematic.

Liquidity pressure is increasing in Vietnam’s banking system. The maturity of USD sales contracts caused a corresponding amount of VND to be withdrawn, pushing up the interbank interest rate. In September, savings interest rates were raised to a new high at many banks, the highest being 8.8 per cent per annum at ABBank. The bank said requirements include deposits being at least VND1.5 trillion ($63.23 million) on a 13-month term, with interest received at the end of the period.

To promote the interest rate support program from the State budget for loans to businesses, cooperatives, and business households, which has now been implemented for three months, the State Bank of Vietnam has required that commercial banks review efforts and notify eligible customers.

The State Bank of Vietnam (SBV) adjusted the selling price for USD from VND23,400 to VND23,700 on the afternoon of September 7. It also stopped listing the intervention buying rate. According to analysts, the decision to raise the selling price is mainly a defensive measure against upcoming US Fed interest rate hikes.