The overnight interbank interest rate increased to 7% – the highest level in three years – under the pressure of credit capital in the year-end season.
According to data from the Vietnam Interbank Market Research Association (VBA), the average interbank interest rate – where loans between banks – increased by 0.8-1.62 percentage points on December 1 for most terms of one month or less, except for 2-week terms.
Specifically, the overnight interest rate – the term that accounts for the majority of transaction value between banks – increased to 7%, the highest since November 2022. The interest rate for other terms such as one week is 7.3%, two weeks is flat at 6.1% and one month also increases to 6.95%.
Besides, the average USD offered interest rate in the overnight interbank market increased slightly to 3.92%, other terms such as one and two weeks remained unchanged.
The average VND interbank interest rate has been in an increasing trend and has been anchored high since the beginning of November. At the same time, deposit interest rates in the residential market also increased on a large scale.
Sharing with investors, Mr. Vu Minh Truong – Director of Capital Resources and Financial Markets of Vietnam Prosperity Bank (VPBank), said that the credit situation increased faster than prolonged mobilization, putting pressure on liquidity and interest rates in the year-end season.
According to the State Bank, as of October 30, credit balance of the entire system increased by about 15% compared to the end of last year and is expected to reach 19-20% by the end of this year – the highest in many recent years.
In a recently released report, VIS Rating – an investment credit rating unit – commented that liquidity is a matter of concern, especially for small banks. The industry-wide loan-to-customer deposit ratio (LDR) has reached 111%, the highest in 5 years because credit growth outstripped deposits.
Liquidity pressure is most evident in small banks, and according to VIS Rating, is likely to continue in the context of these banks’ increased dependence on short-term market capital and high credit demand. In this context, deposits from the State Treasury play an important role in stabilizing the liquidity of the banking system.