At a meeting with leaders of commercial banks on October 16, Prime Minister Pham Minh Chinh asked them to comply with the law and strengthen their governance capacity. Vietnam’s commercial bank sector has continually grown in scale, quality, and financial capacity. Total assets at joint stock commercial banks stand at VND7.5 quadrillion ($307.15 billion) and at four State-owned commercial banks more than VND7 quadrillion (286.7 billion).
According to VnDirect Securities, the State Bank of Vietnam (SBV) has decisively and promptly responded to changes in the international financial market. However, an increase of 100 basis points in the operating interest rate was unexpected, and higher than the forecasted 50 basis points. VnDirect believes the rate may increase by an additional 30-50 points during the closing months of the year. The 12-month deposit interest rate at commercial banks will rise to 6.1-6.3 per cent per annum by end-2022, which is still lower than the pre-pandemic 7.0 per cent per annum.
Securities companies expect increases in deposit interest rates to slow in the third quarter of 2022 because of low demand for capital mobilization. The pressure to raise deposit rates will increase by the end of the year, however, after the State Bank of Vietnam (SBV) opens up credit space for commercial banks and especially when the ratio of short-term capital for medium and long-term loans falls from 37 to 34 per cent, under a Decision from the SBV to take effect on October 1.
In just the first two months of 2022, individual savings deposits in banks reached VND159 trillion ($6.91 billion), higher than the VND158 trillion ($6.86 billion) recorded in 2021 as a whole. According to analysts, this “unusual” movement was mainly due to commercial banks raising their deposit interest rates. The slowdown in other investment channels, such as real estate, securities, and corporate bonds, also resulted in cash flow returning to the banking system.
The USD/VND exchange rate has been quite high in recent days, with the State Bank of Vietnam (SBV) and market operators stopping commercial banks from receiving funds to conduct foreign exchange spot transactions. Despite the fact that no more money was injected into the system and that credit accelerated, liquidity in the banking system remained abundant. This is most evident in interest rates remaining flat at the lower end.
