The Government Office has just issued a document announcing the Prime Minister's conclusions at a meeting on fiscal policy, monetary policy, gold market, exchange rate, interest rate and capital mobilization for development investment. In particular, the Prime Minister requested the State Bank to work with commercial banks to direct and request continued reduction of operating costs, increase technology application, strive to reduce lending interest rates by 1% - 2% - especially for traditional growth drivers, emerging industries, digital transformation, green transformation, social housing...
Input interest rate pressure increases
Speaking to reporters of the Lao Dong Newspaper about the Prime Minister's request to reduce lending interest rates, Dr. Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, said that this is both a goal and a challenge for credit institutions. Because currently, deposits in banks are decreasing or increasing very little, forcing credit institutions to increase mobilization interest rates to attract deposits.
In fact, as of May 21, most private commercial banks have increased their deposit interest rates since the end of March. Some banks have adjusted their term deposit interest rates many times. Most recently, the Military Commercial Joint Stock Bank increased its deposit interest rates by 0.1 - 0.4 percentage points for terms from 1 to 15 months. Vietnam International Commercial Joint Stock Bank (VIB) increased its deposit interest rates for the third time since the beginning of the month by 0.1 - 0.3 percentage points for terms from 1 to 5 months.
Many depositors have begun to feel the savings interest rate increase clearly. The common terms from 6 to 12 months previously had interest rates around 4%/year, but now most have exceeded 4%, some places over 5%.
According to the May 2024 money market report of MB Securities Company (MBS), in April, commercial banks increased their deposit interest rates by a common range of 0.2 - 0.3 percentage points per year. Savings interest rates increased again in the context of people's deposits in the banking system decreasing alarmingly. According to data from the General Statistics Office as of March 25, capital mobilization of credit institutions decreased by 0.76% compared to the beginning of the year, while in the same period last year it increased by nearly 1.2%.
However, Mr. Truong Dac Nguyen, Head of Research Department at WiGroup (specializing in providing economic and financial reports and research), said that the good news is that up to this point, 4 state-owned commercial banks including Agribank, Vietcombank, BIDV, VietinBank still maintain the 12-month term deposit interest rate at 4.7%/year and have not shown any signs of increasing it.
"The pressure to increase interest rates is currently mainly concentrated on small commercial banks, because the interest rates are no longer much different from those of large banks, while they normally have to mobilize at higher, more attractive interest rates to compete. Some other banks have high credit growth targets, so they are forced to increase input interest rates to attract lending capital. However, it is forecasted that mobilization interest rates will only increase slightly in the range of 0.5 - 1 percentage point in the second half of this year," said Mr. Nguyen.
Interest rates tend to increase, exchange rate pressure, inflation... make efforts to reduce loan interest rates more difficult. Photo: LAM GIANG
Difficult to reduce all at once
MBS forecasts that 12-month deposit interest rates of major commercial banks may increase by 0.5 - 0.7 percentage points, to 5.1% - 5.3% in the second half of 2024. However, output interest rates will remain stable at the current level in the context that management agencies and commercial banks are actively supporting businesses to access credit capital.
According to records, many commercial banks are still implementing a series of preferential interest rate credit packages to support businesses and promote credit growth. Mr. Dao Minh Tuan, Deputy Director in charge of small and medium enterprise customers at ABBANK, said that compared to 3 months ago, the bank has reduced 2-3 percentage points of loan interest rates compared to the previous credit package to comply with the direction of the State Bank and the Government.
Agribank is also offering 20,000 billion VND in short-term preferential loans with interest rates 2 percentage points lower than normal lending rates for businesses to supplement working capital and implement production and business plans...
Banking finance expert Dr. Chau Dinh Linh said that in the context of exchange rate pressure and inflation affecting input interest rates, the goal of further reducing lending interest rates is not simple. Therefore, further reducing lending interest rates at the present time depends on the structure of mobilized capital sources of commercial banks, the financial resources of that bank and lending interest rates for each sector and each customer group. "If lending interest rates can be reduced, banks will have a competitive advantage in finding customers and increasing credit growth," said Dr. Linh.
According to Mr. Truong Dac Nguyen, the net interest margin (NIM) of the entire banking industry has now reached its lowest level since 2021, reflecting very low lending interest rates. Combined with the recent move to increase deposit interest rates, banks will have little room to further reduce lending interest rates.
Ms. Tran Khanh Hien, Director of MBS Analysis, said that despite the pressure of exchange rates and input interest rates, commercial banks still have room to reduce lending rates. In fact, the NIM of commercial banks is about 3.2%, some banks are at 4%. Compared to countries in the region with more developed banking systems such as Singapore, Malaysia, Thailand, the average is only 2% - 2.5%.
"High NIM essentially comes from the fact that credit is still the main channel of capital supply for the economy, while enterprises in other countries can mobilize capital through many channels such as stocks, bonds, etc. This means that banks can continue to narrow NIM to reduce lending interest rates. The State Bank allowing customers to borrow capital to repay loans at other banks or requiring banks to announce average lending interest rates is also a solution to create competitive pressure to reduce lending interest rates," Ms. Hien stated.
Proactively reduce costs
Dr. Can Van Luc said that the possibility of further reducing lending interest rates still exists if credit institutions have measures to reasonably restructure capital sources to reduce input costs, continue to apply information technology, digital transformation, and reform administrative procedures to reduce costs and increase labor productivity.
Source: https://nld.com.vn/giam-lai-vay-them-1-2-de-hay-kho-196240521211313557.htm
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