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Deposit interest rates increasing, lending interest rates holding firm
Contrary to previous predictions that commercial banks would raise lending interest rates as they have raised deposit interest rates, banks are either keeping the same lending interest rates or cutting them.
While deposit interest rates have been on the increase, now approaching the 10 percent per annum threshold, lending interest rates have been staying the same.
Tran Minh Khoa, Personal Banking Director of Eximbank, said that the lending interest rate offered by the bank for individual consumer credit remains at 10.5 percent per annum, equal to the ceiling lending interest rate for corporate clients.
Khoa said that though banks are allowed to negotiate interest rates for consumer credit, banks still have to think carefully before making any decisions related to interest rate adjustments.
Khoa said that as deposit interest rates keep rising, thus making input costs higher, it would be quite normal for banks to raise lending interest rates. However, Eximbank does not intend to raise lending interest rates at present.
“Consumer credit has shown signs of growth in comparison with the beginning of the year. However, it would be difficult to attract borrowers if we raised lending interest rates,” Khoa said.
In fact, deposit interest rates have become higher than the lending interest rates now being applied to corporate clients. After deducting the subsidised 4 percent interest rate, export businesses have to pay 1 percent only, while other businesses some 5 percent.
Meanwhile, commercial banks continue raising deposit interest rates. VietA Bank, for example, on May 20, raised deposit interest rates on long-term deposits by 0.1-0.2 percent per annum, pushing the bank’s highest interest rate to 9.89 percent per annum.
However, General Director of VietA Bank Pham Duy Hung also admitted that it is not so easy to adjust lending interest rates. Banks cannot lend to businesses at interest rates higher than 10.5 percent per annum, the ceiling interest rate stipulated by the State Bank.
Some commercial banks have even slashed consumer credit interest rates. ACB’s lowest lending interest rate for consumer credit, for example, has been lowered to 10.5 percent from 12.75 percent applied in early April. Sacombank has also slashed interest rates, but only for loyal clients.
Reassuring people who fear an adjustment of the basic interest rate in the time to come, Governor of the State Bank of Vietnam Nguyen Van Giau has affirmed that the basic interest rate will remain stable in the upcoming months. He said thata businesses should not be too worried about interest rate fluctuations and that they can feel safe when accessing bank loans for expanding business.
VietNamNet, DTCK
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