Vietnam’s large banks lower lending interest rates

Following Bank for Investment and Development of Vietnam (BIDV)’s move, Vietnam Commercial Joint Stock Bank for Foreign Trade (Vietcombank-VCB) on February 9 officially announced lowering the lending interest rate, the local newspaper Thanh Nien quoted Nguyen Thu Ha, Vietcombank’s deputy general director, as saying.
According to Ha, the policy to ease the lending interest rate has been approved by the bank’s director board whereby some branches have started reducing lending interest rate since February 9, 2012.

Particularly, the lending interest rate in dong has been reduced by 2% per year, commercial loans and short term services at 17% per year, short term loans to serve production at 16.5% per year and short term loans for exports at 16% p.a.

Vietcombank’s consumption lending interest rate has been also lessened to lower level whereby short term loans will cost 18% per annum (p.a.), medium and long term loans at 18.5-19% p.a. and the lending interest rate for securities and real estate sectors at 20% p.a.

However, Ha also said that initially, the reduction of lending interest rate will be applied for short term only and mainly for prioritized borrowers such as agriculture, exports and small and medium sized enterprises (SMEs).

With this incentive, at some branches of Vietcombank, the lowest lending interest rate for export is at 16% p.a. and the highest level for non-production loans is at 20% p.a.

Previously, BIDV marked the pioneer in lowering lending interest rate. Since September 2011 so far, the bank has continuously made five reductions of lending interest rate. Currently, BIDV’s lowest lending interest rate for prioritized borrowers is 14.5% p.a. and the highest level is about 17-17.5% p.a.

According to a commercial joint stock bank’s leader in Hanoi, the sign of cooling down interest rate in the interbank market recently was not due to banks’ liquidity has been improved but because large banks did not lend small banks for the fear of risks.

The bank leader added during past time, especially after Lunar New Year (Tet) holiday, the market saw phenomenon of deposit interest rate cap breach again. “Owing to weak liquidity, so they have to raise capital exceeding the allowable deposit interest rate ceiling of 14% per year, thus the lending interest rate still remains at 18-22% per year” the leader explained. – Vietbiz24

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

Posted by VBN on Feb 11 2012. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry