Interest rates have "cooled down" but have not met expectations

Simultaneous interest rate reduction

Since the beginning of the year, the State Bank of Vietnam (SBV) has reduced its operating interest rates three times. Commercial banks have also adjusted their deposit interest rates down, moving towards reducing lending interest rates.

img_1723-1-(1).jpg — Agribank is offering many interest rate reduction programs to support customers.

Local “big guys” such as Vietcombank, Agribank, BIDV, VietinBank have proactively lowered lending rates. Compared to early 2023, lending rates at banks have now decreased by about 1% per year.

At the Bank for Agriculture and Rural Development (Agribank) Dak Nong Branch, interest rates have been reduced 4 times since the beginning of 2023. Currently, short-term lending interest rates at the branch have decreased by 1.5-4%/year; medium and long-term lending interest rates have decreased by 0.3-1%/year.

Reducing interest rates at the present time is considered a "rescue" solution for people and businesses to maintain production and business.

The unit is continuing to reduce interest rates in many support programs and packages. For example, Agribank will reduce 100% of fees and overdue penalties for customers starting from May 2023. From May 15 to September 30, 2023, Agribank will continue to reduce at least 0.5% of lending interest rates for existing customers with outstanding medium and long-term loans. From now until September 30, 2023, new borrowers will be eligible for Agribank's preferential interest rate lending program to support customers.

Similarly, at the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) Dak Nong Branch, it has proactively implemented a policy of reducing lending interest rates. From January 1, 2023 to April 30, 2023, Vietcombank will reduce up to 0.5%/year. From May 1, 2023 to July 31, 2023, it will continue to reduce VND lending interest rates by up to 0.5%/year for all loans of individual and corporate customers.

Still "anchored" at a high level

In fact, local banks have “cooled down” their lending rates. However, according to people and businesses, the level of reduction in lending rates by banks has not been as expected.

Ms. Le Thi Anh, Duc An town (Dak Song) said that in 2021, her family borrowed a medium-term package worth 400 million VND from a large bank in the area. At the time of borrowing, her family had to pay a high interest rate of 11.2%/year. Currently, the bank is still applying that interest rate.

According to many businesses, although banks have lowered interest rates, they are still high.

“Interest rates are still high. We hope that banks will continue to reduce lending rates for all segments. This is the best condition to support customers in this difficult context,” Ms. Anh shared.

Mr. Le Trung Tuan, a business owner in Dak Mil, shared that the interest rate reduction at banks is not uniform across sectors.

“Banks have only reduced interest rates in priority sectors. Meanwhile, the market share of outstanding loans in the consumer and lifestyle sectors is quite large, and lending interest rates have not been reduced. Some cases have been reduced interest rates but not significantly,” said Mr. Tuan.

According to the Provincial Business Association, through understanding the situation of enterprises and cooperatives in the area, the lending interest rate has decreased compared to the beginning of the year. However, the general interest rate is still "anchored" at a high level.

The business community and cooperatives recommend that the Government, the State Bank of Vietnam, and commercial banks continue to have policies to reduce lending interest rates. The banking system needs to stabilize interest rates to support investment in production and business development.

By the end of May 2023, the outstanding loans to the economy in Dak Nong were nearly 41,000 billion VND. The lending interest rates at credit institutions range from 5% to 13% per year. Of which, the lending interest rate from 9-13% per year accounts for 52.44% of the total outstanding loans. The interest rate from 7% to 9% accounts for 23.90% of the total outstanding loans; the interest rate from 5% or less accounts for only 2.61% of the outstanding loans.

Source