HANOI, June 19 (Xinhua) -- Vietnamese banks' interest rates on dong deposits continue to drop after the central bank cut policy rates to shore up the flagging economy, Vietnam News Agency reported on Monday.
Vietnam's four biggest banks, including the state-owned Agribank and three partly privatized Vietcombank, BIDV, and Vietinbank, have cut their deposit rates by 0.5 percentage point on dong deposits with various maturities.
Top lender Agribank said it had slashed interest rates by 0.5 percentage point to 6.3 percent per year on its one-year dong deposits, from 6.8 percent previously and 5 percent on its 6-month deposits.
Vietcombank, VietinBank and BIDV now offer the highest interest rate on dong deposits with maturities from one year to five years at 6.8 percent per year.
Smaller lenders, following in the footsteps of their major peers, have implemented rate cuts by 0.5 percentage point on 6-month and one-year deposits.
Vietnamese banks have lowered dong deposit rates as they seek to cut borrowing costs and beef up lending, bankers said.
The central bank, formally known as the State Bank of Vietnam, said the lower interest rates on short-term dong deposits would enable banks to reduce lending rates further in line with the government's policy to help households and businesses get access to low-cost credit and prevent an economic slowdown.
According to the central bank, credit growth in the banking system in the first five months of the year was up 3.17 percent from the end of last year, lower than the growth of about 8 percent in the same period a year ago.
The Forecasting and Statistics Department under the central bank expected total outstanding loans to grow 4 percent year-on-year in the second quarter and expand by 13 percent for the whole year, lower than the earlier target of 14-15 percent credit growth for this year.
The central bank has cut several policy interest rates for the fourth time this year and further lowered the cap on interest rates that commercial banks can offer on dong deposits with maturities ranging from one month to six months.
The central bank stressed its caution over global inflation and potential interest rate pressure as central banks in major economies stay the course on monetary tightening. ■