HCM City (VNS/VNA) - Deposit interest rates are expectedto remain low until the middle of 2024, with a slight increase anticipatedthereafter due to higher credit demand, analysts said.

However, the rates will not reach the high levels recorded at the end of 2022, following thearrest of the chairwoman of Van Thinh Phat Group, which caused a bank runat private lender Saigon Commercial Joint Stock Bank (SCB). 

The downward trend in savings interest rates has been ongoing since March lastyear, with almost all lenders reducing rates across various terms over thepast months. 

Only a few lenders have increased rates for certain selected depositterms, in particular those longer than 15 months.

Currently, the rate for a 12-month deposit is below 5% per year, down 0.5percentage points from the previous month. 

Shorter term deposits, such as nine months, see ratesranging from 3 to 4% per year, while rates of six-month term deposits fluctuatebetween 2-4.7% per year.

For higher rates, customers should consider longer depositterms such as 15 or 18 months, of which rates are offered at up to 5.75%per year (for online savings accounts at HDBank).

Experts predicted 12-month deposit interest rates of largecommercial banks may increase by 25-50 basis points in 2024, returning tobetween 5 and 5.5% per year. 

Experts attributed the low deposit interest rates to sluggishcredit growth. 

The total outstanding balance for credit at banks decreasedby 0.72 percentage points as of the end of February compared to the end of lastyear, according to a report by the central bank. 

Capital demand is expected to balance out in 2024, with creditgrowth predicted to reach about 13-14% this year, according to a report by MBSecurities Company.

Despite the ongoing drop in savings interest rates, loans,especially old loans that have transitioned from fixed to floating interestrates, have seen only minimal decreases.

Presently, floating mortgage interest rates at State-owned banksare around 10% per year.

Some private banks are offering mortgage interest rates above 11%per year, while others have rates fluctuating above 12% per year, according toa survey by VietnamNews.

Lending interest rates should decrease further in the near future,experts said.

Lower rates would allow businesses and individuals to accesscapital at more reasonable costs, aiding the recovery of production, businessactivity, and consumption, they added.

In a related issue, experts have warned that the risks ofnon-performing loans will continue to worsen dueto troubled corporate bond and real estate markets, both of whichhave high non-performing ratios./.