HANOI, Nov 24 (Reuters) – Vietnamese banks have cut dong deposit rates by up to 3.5 percentage point in the past week as they seek to cut borrowing costs and beef up lending, bankers said on Monday.
The Hanoi-based Military Bank said it had slashed dong deposits rates by 3.5 percentage point to 12 percent per year on its one-year dong deposits from Monday, from 15.5 percent per year previously.
Ho Chi Minh City-based Sacombank STB.HM also said it had cut the yield on its one-year dong deposit to 11.04 percent from last Friday.
“The lower interest on dong deposits would enable banks to reduce lending rates further in line with the central bank’s policy to help prevent an economic slowdown,” a banker at Military Bank said.
She said her bank had also lowered dong loan rates to about 14-16 percent per year and resumed consumer finance loans after several months of suspension as part of the central bank’s credit-tightening policy to battle double-digit inflation.
State-run banks, the market’s major lenders, have also cut dong loan rates in the past week with top lender Agribank now offered 12-14 percent per year to its prime clients.
Last Friday the central bank slashed three benchmark dong interest rates, its third rate cut in four weeks, and lowered bank reserve requirements.
The Southeast Asian country has battled double-digit inflation and a widening trade deficit for much of the year by tightening monetary policy, but officials appear increasingly concerned the global credit crisis could drag down growth.
Vietnam should keep lowering interest rates next year and manage the exchange rate flexibly in the face of a worsening global economy, Prime Minister Nguyen Tan Dung said earlier this month. (Reporting by Nguyen Nhat Lam; Editing by Kim Coghill)