The improved bank liquidity, the slowdown in the consumer price index (CPI) increase, the decreasing interest rates on the open market and the bond interest rate reductions all have been believed to lead to the bank loan interest rate decreases.

Decreasing, but just slightly

Some media channels and the reports by some investment institutions have mentioned the downward trend of bank interest rates in recent days. The sources say that some commercial banks have lowered their deposit interest rates to below 14 percent, the ceiling deposit interest rate stipulated by the State Bank of Vietnam.

However, the database of most of the commercial banks does not show this very clearly. In fact, since March 2011, most banks, both small and big, have been applying the dong deposit interest rates which are nearly equal or equal to 14 percent. This should be understood that banks have been applying the interest rates at below 14 percent for a long time, while the interest rates have not been lowered recently.

The 14 percent maximum interest rates have also been applied for the last few months, but only to “hot” products, which banks have been using to flexibly call for capital in short term. The short term products still keep the interest rates unchanged.

It is undeniable that some banks have slashed the deposit interest rates for long term deposits (12 month term deposits). This shows that banks expect the interest rates to go down in long term.

Recently, the English version of a bulletin of a securities company reported that some big banks are considering easing interest rates, unanimously.

However, when asked about the information, deputy general director of a big bank said: “There is no such information. Why to reduce the interest rate at this moment?”

“Is it for non-economic purposes to think of easing interest rates at this moment?” he doubted.

One week has elapsed since the day the information was released, and the prediction has not come true yet.

Favorable conditions not come yet

On the first days of July, the expectation to reduce interest rates has been facing “headwind”. The food prices have been increasing dramatically, thus pushing the CPI up. Meanwhile, the Government has officially increased the targeted inflation rate to 17 percent.

A prestigious securities company has predicted that the inflation would be 1.5 percent in July 2011.

As such, the high inflation remains a big barrier to the interest rate reduction. Lower interest rates in the context of the high inflation rate would not ensure real positive profits for depositors.

Though some banks have eased the interest rates applied to some kinds of deposits, it is still too early to say about a downward trend in interest rates.

Analysts say that if some banks offer lower interest rates to some subjects and applied low interest rates to some specific credit packages, this should be seen as the “gifts” of the banks which aim to share difficulties with enterprises, rather that a signal for the interest rate reductions.

They have also pointed out that since the credit growth rate is capped at 20 percent in 2011, banks would have to “sell products at high prices” to ensure stable profits. In other words, when banks cannot sell many products, they have to sell dear to earn the profits they want.

Source: TBKTVN