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Thirst for capital eased, lending interest rates going down
There have been signs showing that the interest rates have begun decreasing. However, the high inflation and high gold prices have made banks hesitant to slash deposit interest rates. Therefore, the interest rates are believed not to decrease sharply.
The thirst for capital eased
Nguoi lao dong has reported that the interest rates for the deposits worth less than 100 million dong have decreased to 14 percent and lower, while the deposits worth 100 million dong and more can enjoy the interest rates of 16-16.5 percent per annum.
In fact, some small joint stock banks still pay 17 percent or a little higher for the deposits worth 300 million dong and more. However, it is clear now that the interest rates have begun decreasing. Especially, many banks pay higher for 1-3 week deposits than for longer term deposits, because they fear that the average interest rate would go down in the time to come.
The competition among commercial banks to mobilize capital has been eased, which has paved the way for the lending interest rates going down. According to the State Bank of Vietnam, in July 2011, the lending Vietnam dong interest rates applied to the production sector decreased by 0.1-0.3 percent per annum to 18.64 percent on average.
Meanwhile, businesses complain that though banks have eased the interest rates, the capital costs remain sky high. HD Bank, for example, has cut the interest rates by 1-4 percent per annum applied to the enterprises in the supporting industries, but the interest rates still stay firmly high at 19-21 percent per annum.
Asia Commercial Bank (ACB) is offering the interest rate reductions of up to 1.2 percent per annum applied to some kinds of loans, but the interest rates applied to individual clients remain very high at 20.5-22 percent per annum.
Dau tu has reported that some commercial banks which have seen credit growing slowly so far this year, including Sacombank, OCB or Dong A Bank, are considering adjusting the lending interest rates in order to push up credit.
According to Nguyen Ngoc Thang, Deputy Director of the HCM City Branch of the State Bank of Vietnam, the outstanding loans in the first seven months of the year of the 16 banks in the city increased by 10.7 percent. Seven out of the 16 banks saw the outstanding loans increasing by 12-19 percent, but three banks had the outstanding loans decreasing.
Analysts have said they can see many factors that support the interest rate downtrend. The credit growth rate in the first seven months of 2011 increased by 7.57 percent only, far below the ceiling growth rate of 20 percent. Meanwhile, the total money supply in the national economy increased by 3.57 percent only, while the yearly projected level is 16 percent.
Interest rates will go down slightly
According to Nguoi lao dong, the low credit and money supply growth rates and the high inflation at the same time show that credit and money supply are not the main reasons behind the high inflation rate.
This means that there is still too much room for credit and money supply growth rate, while the sum of money to be pumped into circulation would be higher. Meanwhile, banks, with profuse capital, would not be able to lend money if they still set the high lending interest rates. As such, the lending interest rates will have to go down.
Meanwhile, the newly appointed Governor of the State Bank of Vietnam, Nguyen Van Binh has affirmed that in August 2011, the State Bank will apply a series of economic measures to force the interest rates down to 17-19 percent per annum, commencing from September 2011.
Dau tu has quoted Dr Le Xuan Nghia, Deputy Chair of the National Finance Supervision Council as saying that the deposit interest rate and the average lending interest rate would go down by one percent in the time to come.
vietnamnet
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