|
Interest rates decreased to pre-high-inflation period levels
Yesterday, a series of commercial banks announced interest rate cuts for VND loans, bringing the interest rates down to the levels seen before the inflation period.
Three of the biggest commercial banks in Vietnam, including BIDV, Vietcombank and Vietinbank, announced interest rate cuts on December 4, one day after the State Bank of Vietnam announced a basic interest rate cut to 10%.
The interest rates offered by the Bank for Investment and Development of Vietnam (BIDV) have surprised everyone, as they are at between 10% (the same as the basic interest rate) and 11.5%. These are the short-term lending interest rates BIDV will apply to all clients, while lower rates will be applied to producers that make essential commodities for the national economy.
The medium- and long-term interest rates for the bank are calculated by the deposit interest rate for a 12-month term deposit plus the minimum fee of at least 3% per annum.
Meanwhile, Vietcombank has lowered the interest rates for preferential loans to 0.875%/month, or 10.5% per annum, and lowered the rates for normal loans to 1.04% per month, or 12.48% per annum, effective as of December 5.
As for the enterprises that make products for export and commit to selling foreign currencies they get from export deals to the bank, Vietcombank will apply the lowest rate now available on the market, at 0.42% per month.
Vietinbank has announced that it will apply the floor interest rate at 12% per annum for short-term loans, and 14% per annum for medium- and long-term loans, valid as of December 5. A rate of 11% will be applied to clients who borrow money to purchase rice, farm and forestry produce, or to make essential commodities.
The move by major commercial banks to slash lending interest rates is believed to have an influence on other banks. In fact, many joint-stock banks have also applied interest rates lower than the allowed ceiling rate of 15% per annum. Eximbank, for example, is lending at 7.2% per annum to the export-import companies that commit to selling dollars to the bank.
The East Asia Bank’s preferential lending interest rate has been lowered to 13.8% per annum, while Nam Viet Bank’s preferential rate has been lowered to 14.5% per annum.
With these new commitments by banks, the new lending interest rates offered by BIDV and Vietcombank have returned to the levels seen before high inflation began occurring in November and December of 2007, when the rates hovered around 10.2-11.4% per annum.
Affirming that this is the last interest rate cut for the year, Chairman of BIDV, Tran Bac Ha, said that the bank’s lending interest rates have been adjusted 10 times since July 2008, which has made BIDV’s rates fall significantly.
Ha has denied the opinion that the interest rates will continue further, while businesses still find themselves unable to access bank loans, affirming that several thousands of billions of VND have been loaned to businesses after the last five interest rate cuts by the bank. Ha said that in November alone, the bank’s credit grew by VND 4,000 billion since October.
Ha believes that BIDV’s growth rate in December, when the bank made a breakthrough in the interest rate scheme, is expected to reach 3-3.5%, or VND 4,500-5,000 billion will be loaned.
Professor Dr. Tran Hoang Ngan, Deputy Headmaster of the HCM City Economics University, sees the interest rate cuts as the good thing that can help businesses access low cost capital and overcome difficulties.
Nevertheless, analysts said that the sharp fall of interest rates will cause difficulties for banks, as banks have to lend at low-interest rates, while they had to mobilize capital at high-interest rates previously.
Lao dong
|
