Interest rates are falling and will continue to fall.

Responding to the press about credit room and interest rate reduction, Deputy Governor of the State Bank of Vietnam Pham Thanh Ha said that since the beginning of the year, the general credit growth target has been around 14-15% and has been allocated reasonably to banks. By the end of May, the economy's credit reached over VND12.3 million billion (an increase of about 3.17% compared to the end of 2022).

Phó thống đốc Ngân hàng Nhà nước: lãi suất đang và sẽ tiếp tục giảm - Ảnh 1. — Deputy Governor of the State Bank of Vietnam Pham Thanh Ha

For state-owned commercial banks, the credit market share is about 44% but the growth is only about 35% compared to the level assigned by the State Bank. Meanwhile, the group of joint-stock commercial banks accounts for about 44% of the credit market share, but the current growth is only about half of the assigned level.

Thus, these two groups account for the main credit market share but have not yet grown to the maximum level assigned by the State Bank, so it cannot be said that the credit room has run out at this time.

"So what is the problem? In 2022, credit increased by approximately 8% compared to the end of 2021. If the State Bank's credit management policy does not change, this year with about 14 - 15% as set at the beginning of the year, the economy's capital absorption capacity is significantly weaker than in 2022," Mr. Ha commented.

According to Mr. Ha, there are three main reasons: manufacturing enterprises are facing difficulties in consumption output, so there is a lack of orders, leading to a decrease in the need for new loans for production. Most small and medium enterprises are facing a weakened financial situation, do not have a feasible plan, so they do not meet the conditions for accessing bank loans.

Next is the cause related to real estate credit due to market difficulties, few new projects being implemented, shortage of supply, and reduced demand for large loans.

Phó thống đốc Ngân hàng Nhà nước: lãi suất đang và sẽ tiếp tục giảm - Ảnh 2. — Bank interest rates will continue to fall

In this situation, according to Mr. Ha, the banking industry has a solution to continue directing banks to reduce lending interest rates. From March to May, the State Bank of Vietnam has taken many actions to reduce interest rates. Recent statistics show that the average lending interest rate for new loans is 9.07% (down 0.9% compared to the end of 2022). "We believe that interest rates are decreasing and will continue to decrease in the coming time," said Mr. Ha.

With regard to existing outstanding debts, due to customers having difficulty in repaying their debts, the State Bank has issued Circular 02 allowing debt restructuring and maintaining the debt group. In the coming time, the State Bank will continue to direct in accordance with the spirit of Circular 02 to support businesses and customers in borrowing capital.

For new outstanding loans, the State Bank also requires banks to continue to actively lend so that businesses and customers who meet the conditions will have easy access to credit capital.

"Along with credit policies to support businesses, we hope that other agencies, departments and sectors will actively coordinate to promote policies to support businesses in overcoming difficulties; especially supporting real estate businesses to improve financial capacity and increase access to credit capital...", Mr. Ha said.

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