Vietnamese banks cut deposit rates further to boost economic growth

HANOI, May 19 (Xinhua) -- A string of Vietnamese banks have lowered their deposit interest rates further in a move designed to boost lending to shore up growth in the economy, Vietnam News reported on Friday.

The country's four biggest lenders, including state-run Agribank and partly-privatized BIDV, Vietcombank and Vietinbank, cut their interest rates between 0.2 and 0.3 percentage points on Vietnamese dong deposits with maturities ranging from 6 months to one year.

Vietcombank cut the interest rates for 6-month and 9-month deposits to 5.8 percent and one-year to 7.2 percent, according to a statement on its website.

Smaller lenders, following in the footsteps of their major peers, have implemented rate cuts of up to 0.2 percentage points to between 7.3 and 7.9 percent on 6-month and one-year deposits.

Banks are flush with cash but struggling to boost lending to individuals and businesses on worries about slowing growth tied to a slump in exports and a contraction of the real estate market, experts said.

The central bank has repeatedly asked commercial lenders to cut operating costs and focus on lowering interest rates to support struggling businesses.

In an attempt to help the country meet its economic growth target for the year, the central bank has cut policy interest rates twice since the beginning of the year, with the refinancing rate currently kept at 5.5 percent, the discount rate at 3.5 percent, and the overnight lending rate in the inter-bank market at 6 percent.

Last month, the central bank also ordered commercial lenders to restructure loans through June 2024, including delaying loan repayments by up to 12 months for some businesses faced with difficulties amid an economic slowdown.

Vietnam's economy in the first quarter grew 3.32 percent, the second-lowest quarterly expansion rate since 2011, slowing from a growth of 5.92 percent in late 2022 and 5.03 percent in the first quarter last year, the General Statistics Office said.

Vietnam's gross domestic product is expected to grow 6.5 percent this year, slower than last year's expansion of 8.02 percent.

Meanwhile, inflation pressure is no longer as stressful as last year, as Vietnam's consumer price index in the first four months rose 3.84 percent from a year, under the targeted annual inflation rate of 4.5 percent, according to the statistics department.