Commercial banks gradually announce average lending interest rates

After the State Bank of Vietnam (SBV) issued an official dispatch requesting commercial banks to announce average lending interest rates, with the deadline being April 1, 2024, up to now, commercial banks in Ha Nam province have announced deposit and lending interest rates to customers with a difference of more than 2.5 - 3%; 5 - 7% compared to deposit interest rates depending on the loan purpose.

During the difficult time of production and business, Mr. Tran Van Bau, Deputy Director of Ly Nhan Construction Materials Production Company, always hopes that bank loan interest rates will decrease so that businesses have the opportunity to reduce costs. Because since mid-2023, although interest rates have decreased, the reduction in loan interest rates has not been really significant. Businesses are having to "bear the burden" of high input fuel prices, increasing workers' wages, high bank interest rates, while products are sold slowly, businesses will face many difficulties.

Regarding the requirement for banks to publicly post loan interest rates, Mr. Tran Van Bau said that this is an opportunity for businesses and people to have a basis to compare loan disbursement interest rates between banks, forcing credit institutions to compete for customers. For commercial banks that do not adjust interest rates appropriately, customers can switch to borrowing from other banks.

**Instructions for customers using services at Agribank Ha Nam Branch II.**
Photo: Thanh Binh

Sharing the same opinion with Mr. Tran Van Bau, many customers expressed their agreement, support, and appreciation after the State Bank issued an official dispatch requesting commercial banks to announce average lending interest rates, the deadline is April 1, 2024. Accordingly, the Joint Stock Commercial Bank for Investment and Development of Vietnam ( BIDV ) announced on its website that the average lending interest rate from March is 6.49%/year; the difference between the average lending interest rate and the average capital mobilization interest rate is 3.12%/year. Agribank announced that short-term lending for a number of priority industries and sectors under the direction of the Government, the State Bank has an interest rate of 4%/year; the interest rate for regular short-term loans is 5%/year, medium and long-term is 6%/year; credit card lending is 13%/year. The average lending interest rate is 7.47%/year, the average cost of borrowing is 6%/year (mobilization interest rate is 4.2%/year, other costs such as compulsory reserves, payment reserves, deposit insurance and operating costs are 1.8%/year); the difference is 1.47%/year. The Joint Stock Commercial Bank for Industry and Trade (Vietinbank) announced the average lending interest rate is 6.3%/year, the average difference between lending and mobilization interest rates is 2.45%/year...

According to the explanation of many commercial banks in the area, announcing the loan interest rate is not difficult, because the interest rate for personal loans to buy houses, consume... has long been public. However, for corporate customers, which have their own characteristics, the interest rate depends on the customer, so the interest rate will also be different, leading to the difficulty of having an average rate.

Mr. Hoang Xuan Hoi, Deputy Director of Agribank Ha Nam Branch, said: The branch regularly publicizes lending and capital mobilization interest rates to customers. However, depending on each customer group, loan term according to project programs, capital mobilization and disbursement time with many different interest rates. If it is publicized in detail, it will be difficult. In the first 5 months of the year, the branch has focused on sharply reducing lending interest rates, even in many cases the difference between mobilization and lending is not much, only about 1.5 - 2%.

According to the synthesis of the State Bank of Vietnam, Ha Nam Province Branch, as of the beginning of the second quarter of 2024, the interest rate for mobilizing deposits with terms from 1 month to less than 6 months is commonly at 4 - 4.5%/year; terms from 6 months to 12 months are commonly at 5 - 6%/year; terms over 12 months are commonly at 6 - 7%/year. Short-term lending interest rates are commonly at 7 - 9%/year; medium and long-term lending interest rates are commonly at 8 - 10%/year.

For USD, the mobilization interest rate is 0%/year for deposits of organizations and individuals. The common lending interest rate is 4-5%/year for short term; from 5-6%/year for medium and long term. It is estimated that by the beginning of April, the outstanding credit balance in the whole province reached about 72,500 billion VND, of which the outstanding balance is divided by interest rate levels: From 7% or less, there is 24,330 billion VND (accounting for 33.84% of total outstanding balance); from over 7%/year - 10%/year, there is 31,950 billion VND (accounting for 44.37%); from over 10%/year - 11%/year, there is 11,190 billion VND (accounting for 15.56%); from over 11%/year - 13%/year, there is 2,684 billion VND (accounting for 3.73%); over 13%/year is 1,793 billion VND (accounting for 2.49% of total outstanding debt).

In the coming time, the Ha Nam Provincial Branch of the State Bank will direct credit institutions to actively implement a number of credit growth solutions, directing credit to production, business, priority sectors and growth drivers; strictly control credit for potentially risky sectors, ensure safety, efficiency and control liquidity risks; continue to reduce costs, strive to reduce lending interest rates to a reasonable level; implement policies to restructure debt repayment terms and maintain debt groups to ensure timely support for businesses and borrowers facing difficulties, while not allowing profiteering, violating regulations and distorting the nature of bad debts.

Strictly implement the public announcement and transparency of average lending interest rates so that businesses and people can easily choose banks with low interest rates that meet their credit needs. Focus on lending for living and consumption purposes, promote lending through electronic and online forms. Promote the implementation of credit programs, projects and policies such as: VND 30,000 billion credit program for forestry and fishery; VND 120,000 billion program for lending to social housing, workers' housing, and renovation of old apartments, etc.

Tran Huu

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