As of the end of May, domestic credit increased by 8.04% compared to the end of 2021 and 16.94% over the same period in 2021.

According to a recent macro update report by Vietcombank Securities (VCBS), as for lending interest rates, the commercial banking system has started implementing a program to support 2% interest rates from the state budget of VND 40,000 billion accordance with Decree 31 of the Government and Circular 03 of the State Bank.

During this period, the SBV showed its determination to implement an effective interest rate support program to focus on a number of industries to support the post-epidemic economy. Thus, the direction of the SBV is still to reduce lending interest rates to help businesses recover after the pandemic.

However, with credit growth forecast to be higher than the same period last year, the experts believe that deposit interest rates are under increasing pressure. Accordingly, lending interest rates cannot avoid certain pressures.

With inflationary pressure forecasted to continue in the coming months along with the need for higher credit growth during the economic recovery period, deposit interest rates may be under pressure to increase by 1-1.5 percentage points for the whole year 2022.

Meanwhile, VCBS forecasts that lending interest rates will see upward pressure but there will be a delay compared to the time when deposit rates increase. Along with that, there will be a divergence between the growth rate and the time of increase among industries.

In May, deposit interest rates increased mainly at joint-stock commercial banks with an average increase of 0.1 - 0.2 percentage points, the highest increase in particular at 12-month terms with an increase of 0.7 percentage points. Thus, from the beginning of the year until now, deposit interest rates have increased by 0.3 - 0.6 percentage points.

As of May 31, 2022, bank credit increased by 8.04% compared to the end of 2021 and increased by 16.94% over the same period in 2021. The data partly shows that credit tends to increase higher for post-pandemic recovery period, especially in the trade and service industries.

Kylie Nguyen