Outlook for lending rates in 2025?

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Up to now, the lending interest rate level continues to decrease. Photo: Internet

According to the SBV, in managing interest rates in 2024, the SBV will continue to maintain the operating interest rates amid the global world interest rates remaining at high levels.

Thereby, enabling for credit institutions (CIs) to access capital sources from the SBV at low costs; meanwhile, creating sources to support the economy.

The SBV also continues to direct CIs to reduce operating costs to strive to reduce lending interest rates, and at the same time requires CIs to report and publicly announce the average lending interest rate, the difference between deposit and average lending interest rates on the CIs' electronic information pages.

According to interest rate reports of commercial banks, up to now, the lending interest rate level has continued to decrease by about 0.96%/year compared to the end of 2023.

For example, Agribank has adjusted the lending interest rate floor 4 times with a decrease of 1.0-2.5%/year.

By November 30, 2024, the average lending interest rate of this bank has decreased by about 1.5%/year compared to the beginning of the year.

Currently, Agribank's normal lending interest rate floor is from 5.0%/year for short-term and from 7.0%/year for medium and long-term.

In the 2025 Banking Outlook Report, Vietcombank Securities Company (VCBS) pointed out that lending interest rates have dropped to a record low in the third quarter of 2024.

Specifically, according to data compiled from the financial statements of 27 listed banks, the average lending interest rate has decreased by about 2.7 percentage points from the peak in the first quarter of 2023.

According to VCBS, this is the lowest lending interest rate in many years.

The fact that the mobilization interest rate rise has been adjusted again since Q2/2024 but in a lag from 3-6 month to reflect in the lending interest rate.

Therefore, the lending interest rate level in the market will be flat in Q4/2024.

Similarly, according to the analysis report of UOB Bank, the VND interest rate level has remained stable in the past few months, with the mobilization interest rate from commercial banks for terms under 6 months at around 4-4.5% and for terms of 12 months at 5-5.5%.

This is a suitable interest rate in the context of overall inflation in 2024 below 4% and international USD interest rates around 4.5%.

Therefore, UOB forecasts that the Government and the SBV will continue to maintain current policy interest rates in a neutral monetary policy in the first few months of 2025.

In 2025, VCBS predicts that lending interest rates will increase by 0.5-0.7 percentage points in the context of economic recovery and stronger credit demand.

In the short term, lending interest rates will be differentiated. Lending interest rates for priority sectors such as agriculture, exports, etc belong to under preferential interest rate programs, which may lead to a further slight decrease in interest rates.

Interest rates in sectors with faster recovery and higher risks such as real estate and construction will be adjusted upward following the increase in deposit interest rates.

Mr. Tim Leelahaphan, regional economist for Thailand and Vietnam at Standard Chartered Bank, expects the State Bank of Vietnam to increase interest rates by 50 basis points in the second quarter of 2025.

He said that expectations of strong economic growth from the Government are supporting the current low interest rates.

However, the actions of the US Federal Reserve (Fed) are also an important factor influencing the SBV's monetary policy decisions.

Interest rates in sectors with faster recovery and higher risks such as real estate and construction will adjust upward following the increase in deposit interest rates.

At the meeting on December 18, 2024, the Fed cut interest rates for the third consecutive time this year, by 0.25 percentage points, bringing the total rate cut since September to 1 percentage point. Accordingly, the US reference interest rate is 4.25-4.5%.

As a result, the USD in the world has recorded a cost rise, which may affect the domestic exchange rate, requiring flexibility and caution in monetary policy management.

At the Conference on implementing banking tasks in 2025 held on December 14, 2024, Governor of the State Bank of Vietnam Nguyen Thi Hong also shared about the major challenges for the State Bank in managing monetary policy.

That is, we must manage to achieve many goals, both controlling inflation and supporting economic growth while still ensuring the safety of banking operations; reducing interest rates while still stabilizing exchange rates...

Therefore, in 2025, the SBV said that it will manage interest rates in accordance with market developments, the macro economy, inflation and monetary policy targets.