Private commercial banks have been lifting their deposit rates this month to attract capital and notably, some of them have increased their rates more than twice.

The Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) became the first large commercial bank with state capital to raise deposit rates earlier this morning.

Nearly 20 commercial banks in Vietnam have adjusted deposit rates since the beginning of this month, with most lowering rates.

The State Bank of Vietnam (SBV) has sent a document to credit institutions and branches of foreign banks and SBV in provinces and centrally-run cities regarding the reduction of interest rates.

Though credit demand is recovering quickly, banks still have to face big challenges related to rising bad debts, provisions and deposit interest rates.

Experts forecast lending interest rates may hike in the short term but remain stable or even decline in the long run, providing appropriate moves are made.

Many banks have cut deposit interest rates after the State Bank of Vietnam (SBV) lowered the ceiling levels of interest rates from October 1.

Several major banks have cut lending rates to offer timely support to customers, which is described as a positive sign, especially at the end of the year when the demand for loans increases.

The total outstanding loans in Hanoi was estimated at 1.6 quadrillion VND (70 billion USD) in the first half of this year, according to the State Bank of Vietnam’s Hanoi branch.

Interest rates for different terms from now to the end of 2017 are likely to decline by 0.5–1 percent from 2016 thanks to positive signals from the stock and property markets, macro-economic indexes, the Government’s attentions to businesses and banks’ strategies for attracting new clients.

The fluctuations in deposit rates at the beginning of March were an anomaly and things have returned to normal now, says Deputy Prime Minister Vuong Dinh Hue.

After numerous hikes in interest rates this year, joint stock commercial banks have cut deposit rates for the first time thanks to good liquidity amid a lending slowdown.

The list of banks taking part in the race to raise deposit rates continues to lengthen, and this has taken the interest rate on long-term deposits to 8.4 percent.

Individuals as well as small and medium-sized enterprise are apprehensive loan interest rates could rise since banks have kept hiking deposit interest rate since the end of last year.