The Research centre of Saigon Securities Incorporation (SSI) has released a monetary market report for the week of August 17th 21st. The State Bank of Vietnam (SBV) still did not conduct any transaction on the Open Market Operation (OMO) but continued to purchase a large amount of foreign currency. The liquidity of commercial banks remained very abundant, and interbank interest rates slightly declined by two basis points, closing the week at 0.24 percent per annum for overnight term and 0.33 percent per annum for one-week term.
On August 14th, the SBV issued Circular 08/2020 extending the deadline for banks to comply with the cap on short-term capital to medium and long-term loans which was prescribed in Circular 22/2019 by one year (reducing from the current 40 percent to 37 percent from October 1st 2021, to 34 percent from October 1st 2022 and to 30 percent from October 1st 2023).
Thanks to that, commercial banks will have more resources to expand medium and long-term credit packages for customers.
In the week, the deposit interest rates were further cut in some banks, in which the four state-owned banks lowered the rates by 30 40 basis points on terms of six months to less than 12 months and kept the rates unchanged on long terms. A few other commercial banks reduced deposit rates by 20 basis points across all terms.
The current interest rate tables of the four state-owned banks are equal at 3.5 four percent per annum for terms of less than six months, 4.1 4.3 percent per annum for terms from six months to less than 12 months, and 5.5 percent per annum for terms of 12 and 13 months. The deposit rates of most private joint stock banks are higher than the rates offered by state-owned banks by 0.5 1.5 percent per annum across all terms, but the rates for terms of 12 months or more at some private banks (such as Asia Commercial Joint Stock Bank (ACB) and Vietnam Technological and Commercial Joint Stock Bank (Techcombank) are even lower than state-owned banks’.
The movements in the last week were in line with SSI Research’s expectation that deposit interest rates could fall further by 50 70 basis points for terms of less than 12 months and 20 50 basis points for terms from 12 months or more in the last five months of 2020.