On the afternoon of November 4, at the regular Government Press Conference in November, the State Bank of Vietnam (SBV) answered the press regarding the issue of interest rate management.
"The State Bank of Vietnam has adjusted the operating interest rate four times with a reduction of 0.5-2%/year, but the average deposit and lending interest rates of new transactions at the end of August 2023 only decreased by about 1% compared to the end of 2022. Please give your assessment of the interest rate reduction of commercial banks, is it commensurate with the reduction of the State Bank?", the reporter asked.
Responding to this issue, Deputy Governor of the State Bank Dao Minh Tu emphasized that up to now, interest rate management has achieved the goal of reducing interest rates, supporting businesses, supporting credit growth, and expanding investment for GDP growth.
According to the Deputy Governor, the management of mobilization interest rates depends largely on inflation as well as many other indicators. Therefore, banks mobilize with reduced interest rates, but when lending, the reduction must be at an appropriate level. This is a very important issue in directing and operating to be consistent with the macro economy.
Deputy Governor of the State Bank Dao Minh Tu.
According to Mr. Tu, interest rates are closely related to exchange rates. When the interest rate of the Vietnamese dong is too low and the exchange rate is high, especially when high interest rates in other countries are strongly affecting Vietnam, this can create a situation of dollarization, as well as increase fluctuations in exchange rate management policies.
According to the Deputy Governor, interest rates also affect many other issues in the economy: fiscal policy, bond issuance, resource mobilization and state lending. Therefore, interest rate management must harmonize fiscal policy and monetary policy.
"The State Bank always has to calculate to find the most reasonable solution in managing interest rates," Mr. Tu affirmed.
From the beginning of the year, Mr. Tu said that the State Bank has emphasized the message, even using its tools to facilitate interest rate reduction. Since the beginning of the year, the SBV has lowered the operating interest rate 4 times, the reduction is up to 2%. For commercial banks, by the end of July and early August, the interest rate reduction is about 1% compared to the end of 2022.
“With the fluctuations of the world economy, as well as the resilience of the economy, and the policy of ensuring inflation below 4.5% to support growth, we expect that by the end of this year we can achieve an average reduction in interest rates of commercial banks of 1-1.5%. However, up to now, according to statistics, the average interest rate of new loans has decreased by 2-2.2%,” the Deputy Governor informed.
The State Bank of Vietnam has asked commercial banks to use all measures from now until the end of the year to reduce interest rates on old loans to support businesses.
Mr. Tu also said that there are still some old loans when commercial banks mobilized high capital that may still be anchored high due to policy delays, as well as to ensure the harmonization of financial plans of commercial banks. The State Bank of Vietnam has asked commercial banks to use all measures from now until the end of the year to reduce interest rates on old loans to ensure support for businesses.
The Deputy Governor said that on October 27, the State Bank of Vietnam held a meeting with 35 commercial banks that account for the main lending proportion of the economy. The State Bank of Vietnam listed banks with high interest rates and banks with lower interest rates. It also requested banks with high interest rates to find measures to lower interest rates.
“The working session was very intense, specifically with banks that have high input and output interest rate differentials.
There are still banks with average lending rates higher than 9%. These banks have been asked to reduce interest rates,” said Mr. Tu .
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