Leading commercial banks cut lending rates
Three commercial banks that hold more than 50 per cent of the domestic banking market have cut lending interest rates by up to 2 percentage points to try and overcome business thirst for capital.
The simultaneous - and welcome - move by the banks provokes people to think about a further ebbing of interest rates at the same time as macro-monetary policies show good signs of controlling inflation. Inflation rate (month on month) in June was 2.14 per cent compared to 3.91 per cent in May.
On Thursday, the Ha Noi-based Vietcombank reduced lending interest by one percentage point to 20 per cent annually for Vietnamese dong loans, and by 0.5 per cent to 8.5 per cent yearly for US dollar loans.
These rates are only being offered to traditional clients, major partners, borrowers involved in Government projects, agricultural enterprises, agro-fish cultivation, essential goods for domestic demands, petrol and gas, medicine and manufacturing materials imports.
The State Bank of Viet Nam has capped its lending rate at the maximum of 21 per cent a year. Most banks have been charging clients similar levels.
Also this week, Agribank, the Ha Noi-based State-owned bank, moved down its annual lending interest for loans in dong by 0.5 percentage point to 20.5 per cent, and by 2 percentage points to no more than 8 per cent a year for short-term US dollar loans.
About 10 days ago, BIDV, another State-owned bank in Ha Noi, cut its rates by 0.2 percentage points to 20.8 per cent for all client groups. The reduction was 0.6 percentage points for short-term loans and for priority sectors.
BIDV also let the US dollar lending rate slide by 2 percentage points to no more than 8.8 per cent a year for enterprises making or importing fertilisers, petrol or gas, plastics, chemicals, machines, industrial spare parts, medicines and fabrics.
Other imported goods and products will be charged less than 9.8 per cent US dollar lending rate, down 1 percentage point.
The interest-rate reductions will cut about VND300 billion (US$17.86 million) from BIDV’s revenue and about VND400-500 billion ($23.81-29.76 million) from Agribank’s revenue.
General director of Vietcombank, Nguyen Phuoc Thanh, and BIDV chairman, Tran Bac Ha, told reporters they were trying to help enterprises access capital easier, to stabilise the economy and control inflation.
The moves by Vietcombank and the State-owned Agribank and BIDV are quite important as most banks are charging the maximum lending rate of 21 per cent.
Some joint-stock banks have even used technical means to charge lending rates of up to 24 per cent.
[Three other banks, Techombank, VIB and Sacombank, face problems. They have been ordered by the State Bank to seriously punish personnel who have been asking for much higher lending rates.]
However, several joint-stock banks have told the Viet Nam News that they have no plans at present to reduce lending interest rates.
"I don’t understand why those banks have moved down lending rates," a representative of Military Bank said.
Deputy General Director of Asia Commercial Bank, Nguyen Thanh Toai, said deposit interest rates were still high.
"How can we reduce lending rates? With a 21 per cent lending cap, we are suffering serious write-downs. Reducing lending rates at this time is just (other banks’) business," he said.
Most banks are offering up to 18-19 per cent per year for long-term deposits.
Commenting on current interest rates, Nguyen Minh Phong, head of economic research staff at Ha Noi Economic and Social Development Research Institute said high interest would limit investment and could lead to stagnation, unemployment and bankruptcies.
Most capital for existing enterprises come from bank loans. If lending rates continue to increase, they would not be able to continue, said Bui Duc Thu, a senior official from the National Assembly Finance and Budget Commission.
He added that bankruptcies would be common and the Government’s target of 7 per cent economic growth would be difficult to achieve.
VNN
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