In a recent report, VnDirect’s analysts said they believe lower lending rates will be the factor that promotes the recovery of consumption and private investment in the coming quarters.

According to VnDirect’s analysts, the capital cost of banks is reducing thanks to the impact of the State Bank of Vietnam (SBV)'s four policy interest rate cuts since the beginning of this year and the issuance of Circular No. 02/2023 that allows extending the provision for bad debts.

According to VnDirect's statistics, at the end of July, the 12-month deposit interest rate of State-owned banks dropped to 6.3 per% year, down 1.1 percentage points compared to the beginning of the year.

Meanwhile, 12-month deposit interest rates of private banks range from 6.3% to 7.0% per year and average at about 6.7% per year, down nearly 1.6 percentage points compared to with the beginning of the year. In the group of private banks, deposit interest rates decrease most significantly by 0.3-0.7% per year in some banks such as VIB, TPBank, LPBank, Sacombank, SeABank, VPBank, SHB and OCB.

VnDirect forecast the average deposit interest rate for 12-month term will decrease to 6.0-6.2% per year in the second half of 2023 due to the impact of four policy interest rate cuts of the SBV and slow credit growth in the first half of 2023. Besides, the Government will further promote public investment, thereby injecting more money into the economy, while the SBV still has room to loosen monetary policy.

The SBV has continuously asked credit institutions to minimise costs and stabilise lending interest rates to support business recovery and development.

The central bank set this year’s credit growth target for banks at 11%, but total outstanding loans in the economy increased by only 3.36% as of June 15 compared to the end of 2022, the lowest level for the past ten years./. VNS