Disbursement for loans at interest rate of 17-19pct/yr remains low

A corporate finance director of a state-owned commercial bank said that his bank had lowered the lending interest rate to 18 percent per year and in fact even some enterprises with good performance enjoyed the lending interest rate of only 17 percent per year.
However, the recent disbursement volume with low interest rate has been not much with only about tens of billion of dong.

The reason was that banks can not find enterprises with good performance to lend while the profit of enterprises is too low, so they also limit borrowing bank loans.

This chief also said that the lending conditions are also stricter, including transparency financial report, current business situations of borrowers as week as collateral.

Truong Van Phuoc, general director of Vietnam Export and Import Commercial Joint Stock Bank (Eximbank-EIB) said that so far his bank has disbursed some 500-600 billion dong with low lending interest rate. However, those who want to borrow capital must have good performance and commit to sell foreign currency for the bank.

In addition, some bank branches or small banks said that they can not lend much because limitation on credit growth ceiling of 20 percent. At the same time, from September 8, with the central bank’s regulation on deposit rate cap at 14 percent per year, banks, especially small banks, are afraid of lacking of raised capital for lending activities.

Pham Ngoc Hung, permanent deputy chair of the HCM City Business Association, said currently small businesses do not dare to borrow capital because their profits are not up to 10 percent due to too high input costs amidst low production selling price.

Leader of a large steel manufacturing company also suggested that presently enterprises should narrow the current production and increase repayment for debts but not borrowing more money. – Vietbiz24

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial, Vietnam interest rates