Banks cut deposit rates, need more time to reach target

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Many commercial banks lowered their interest rates on dong deposits Monday. The move came after the institutions reached an agreement to do so at an industry meeting early this month.

Viet A Bank cut its rates to as low as 10 percent, the lowest level on the market. For other lenders, the popular interest rates on dong deposits are 11-11.2 percent per annum.

The goal is to lower lending rates to about 12 percent and deposit rates to 10 percent.

But Duong Thu Huong, chairwoman of the Vietnam Bank Association, said it would take some time before the deposit rate target can be reached. Commercial banks can't just cut their rates to 10 percent immediately, she said.

Huong also said that since the gap between lending and deposit rates is now too small, it's not easy for banks to just lower their lending rates.

According to the Vietnam News Agency, several banks cut their lending rates by 0.5-1.5 percentage points this week while others planned to follow suit next week. Four major lenders Vietcombank, Vietinbank, Agribank and BIDV currently offer dong loans at 12-12.5 percent.

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