Which bank has the highest interest rate in June 2023? (Source: Labor)

Which bank has the highest interest rate?

The State Bank of Vietnam (SBV) has announced another reduction in operating interest rates from May 25. This measure is aimed at helping banks reduce deposit interest rates, thereby creating conditions for reducing lending interest rates and supporting the economy.

Accordingly, the maximum interest rate applied to deposits with terms from 1 month to less than 6 months has decreased from 5.5%/year to 5.0%/year. Following the decision to reduce the operating interest rate by the State Bank of Vietnam, from May 25, banks have simultaneously adjusted the new deposit interest rate schedule with a sharp decrease in many terms.

Deposit at the counter

Savings interest rates at some banks continue to fall sharply for many terms. As of the morning of May 25, the highest savings interest rate for a 12-month term is currently 8.2%/year at VIB, followed by 8.1%/year at ABBank and Bao Viet, down 0.2% compared to April.

SCB, which has always been the leader in savings interest rates in the system, now has a 12-month term interest rate that has dropped sharply to 7.8% per year.

For a 6-month term, the highest bank interest rate currently applied is 7.8%/year at ABBank, GPBank; 7.75%/year at SCB; 7.7%/year at NCB.

For longer terms from 18-24 months, the highest interest rate is 8.30%/year applied by ABBank and Timo.

Meanwhile, deposit interest rates at the four major banks (referred to as Big4) including Agribank, BIDV, Vietcombank and VietinBank decreased by 0.5%/year for terms of 1-3 months and 0.3%/year for terms of 6-24 months compared to the beginning of May. The highest savings interest rate of these four banks is 6.8%/year for terms of 12 months or more.

For terms of 6 - 9 months, the listed interest rate is 5.5%/year.

Submit online

With a 1-month term when saving online, no bank applies the rate of 5.5%. The highest current bank interest rate is 5.50% listed by ABBank, Bac A, SCB, Nam A Bank, VIB... Similarly with a 3-month term, most banks are listed in the range of 4.0-5.0%.

Nam A Bank is the bank with the highest interest rate for 6-month term at present, at 8.5%, followed by ABBank at 8.2%.

For a 12-month term, GPBank is the bank that applies the highest interest rate, at 8.50%/year. For longer terms from 18-24 months, GPBank is still the bank that applies the bank interest rate, at 8.6%/year.

The form of direct savings deposit has a deposit interest rate of banks currently more attractive than cash deposit at the counter. Therefore, you can consider the form of deposit to enjoy the highest interest rate and incentives.

Money will flow out of the banking system.

After three consecutive cuts by the State Bank of Vietnam, the operating interest rate has decreased to the pre-Covid-19 level, and the deposit interest rate ceiling has returned to the pre-Covid-19 level. However, the average lending interest rate is still about 1% higher than before the pandemic.

In contrast to the race to increase deposit interest rates at the end of last year, in recent months, the market has witnessed a race to reduce deposit interest rates.

Interest rates on 12-month deposits at many banks have fallen to below 8%/year. This interest rate has decreased by 2-4%/year compared to the peak of the interest rate race in December 2022, depending on the bank.

People always expect positive real interest rates. However, if interest rates fall sharply, money may flow out of the banking system.

BIDV Chief Economist and Director of BIDV Training and Research Institute, Dr. Can Van Luc, commented: “If the reduction is too deep, the liquidity of the banking system will be difficult because people will see that low-interest deposits will invest in other areas.”

The lending interest rate tends to decrease but remains high. The average new lending interest rate in VND of commercial banks remains around 9.3%/year.

Current lending rates are high partly because banks have raised a large amount of capital at high costs since the second half of last year. Many banks have raised high interest rates with long terms since the end of last year, so they are now struggling to reduce lending rates.

Capital mobilization increased while credit slowed down, making banks even more stuck with high mobilization interest rates, making it difficult to reduce lending interest rates.

Lending interest rates are expected to fall to pre-pandemic levels in a few months, as commercial banks absorb all of the previously high-priced capital.

Many experts believe that although lending interest rates may decrease further in the coming time, with the health of businesses weakening and disbursement conditions not being "relaxed", credit will likely continue to increase slowly.

According to economist Dr. Nguyen Tri Hieu, interest rates are on a downward trend, but economic risks are increasing, meaning that banks will be more cautious when lending, and it will not be easy for businesses to borrow capital. On the business side, even for healthy businesses, the demand for loans is only at a "moderate" level due to difficult output, reduced market demand, and slow sales of goods. Only when the economy recovers better, will businesses be bold enough to borrow capital.

Many economic experts believe that reducing interest rates alone cannot save businesses, but other synchronous solutions such as tax reduction, increased social security, etc. are needed to stimulate demand, increase aggregate demand for the economy, and partly offset the decline in external demand.