Topic: Interest rates

Rates are generally coming down but can be quite high on significant deposits at certain banks.

Regulatory rates reduced by 0.5-1% from March 15.

The commercial banks committed to a reduction in loan rates of between 0.5 and 3 per cent per annum.

Figures reveal that 12 banks have committed to cut rates from 0.5-3 percentage points per annum.

Mr. Petri Deryng, Head of Finland’s Pyn Elite Fund, has some comforting words for investors in its portfolio.

SSI Research has published a report on the estimated business results of 26 companies in the third quarter of this year. Twenty-four are forecast to post profit growth while two are forecast to see a fall in profits. Banking profits are believed to have grown strongly in the third quarter despite interest rate hikes putting pressure on the net interest margin (NIM). The leading banks in terms of profit were Vietcombank, BIDV, ACB, and VPBank.

Liquidity in the banking system has risen in recent times, helping to cool interbank interest rates. The overnight interbank interest rate has fallen from more than 8.35 per cent per annum to 7.72 per cent. According to the Vietnam Interbank Market Research Association (VIRA), liquidity is forecast to be less of an issue but still not abundant.

A recent report from the Agribank Securities Company (Agriseco) noted that the banking sector will face challenges maintaining profit growth in 2022 and 2023 at levels recorded in 2020 and 2021. Growth has declined amid insufficient space for credit growth, while Net Interest Margins (NIM) face pressure from rising deposit rates as lending rates prove difficult to increase.

In the money market last week (September 19 to September 23), the State Bank of Vietnam (SBV) continued to use open market operation tools to maintain sufficient liquidity in the system and indirectly move on the interbank interest rate level. At the end of the week, the central bank net withdrew VND34.6 trillion ($1.46 billion) through the open market channel and VND23 trillion ($967 million) through foreign currency sales. It recently increased some operating interest rates, after nearly eleven years since the last increase. Rates such as discount rates and refinancing rates were raised by 1 per cent.

Viet Dragon Securities (VDSC) has said that in the context of central banks in other countries not dealing resolutely with high inflation, the USD may return to its peak established in early 2022. This means that pressure will inevitably be on the VND/USD exchange rate, and the VND could depreciate 4-5 per cent this year. Notably, lending interest rates will also increase sharply in the near future.