An unprecedentedly large credit package.

With the aim of supporting customers in accessing preferential loan capital to boost production and business, contributing to achieving the goal of economic growth recovery and alleviating difficulties for businesses, all four state-owned commercial banks are launching an unprecedented large-scale credit package with preferential interest rates.

470,000 billion VND and 500 million USD

Specifically, Vietnam Joint Stock Commercial Bank for Industry and Trade ( VietinBank ) has just launched a credit package of up to 100,000 billion VND with interest rates starting from 7.1%/year to support the production and business needs of individual customers. The credit package will be implemented from now until June 30th, with a maximum loan term of 12 months.

The Vietnam Bank for Agriculture and Rural Development ( Agribank ) has launched a preferential credit package for businesses with a scale of up to 100,000 billion VND and 500 million USD. The target beneficiaries are businesses with efficient operations that need short-term loans to supplement working capital for production and business or to support export activities.

The program runs from now until June 30th. "The program applies to short-term loans (under 12 months), with interest rates up to 1.5 percentage points lower for loans disbursed in VND and 1 percentage point lower for loans disbursed in USD compared to current rates, depending on the loan term and the specific business profile," said an Agribank representative.

Vietcombank is launching a 100,000 billion VND credit package to provide additional working capital loans with interest rates ranging from 7.5% to 8.6% per year. Photo: THY THƠ

Another major bank, the Vietnam Investment and Development Bank (BIDV), has launched a loan package worth up to 170,000 billion VND for individual customers, meeting their needs for consumer loans and business financing. Specifically, from now until December 31st, BIDV is implementing a medium- and long-term credit package worth 100,000 billion VND, with interest rates starting from 9.5% per year, for individual customers borrowing for consumption, car purchases, or business production.

In addition, BIDV is implementing loan packages totaling 70,000 billion VND, with interest rates starting from 7% per year, to meet the capital needs of customers for production and business purposes in 2023 with terms under 12 months. Of this, 20,000 billion VND is applicable to individual customers needing loans in the agricultural and rural sectors; while the 50,000 billion VND package is for individual customers needing loans for production and business in all sectors, from now until May 31st, with interest rates starting from 7.5% per year for loans with terms under 6 months and from 8.5% per year for loans from 6 months to 12 months…

Finally, Vietnam Foreign Trade Commercial Bank (Vietcombank) is implementing a 100,000 billion VND credit package to provide additional working capital loans with interest rates of 7.5%-8.6% per year for loans under 3 months to under 12 months.

Further cost reductions are needed.

Ms. Nguyen Thi Dien, General Director of An Phuoc Garment and Embroidery Co., Ltd., said that An Phuoc relies heavily on loans to purchase raw materials and operate production and business. Access to loans with preferential interest rates during this period is extremely valuable to the company. "For a long time, the company's accounting department has always strived to balance and find loan sources with suitable interest rates."

"The company also has good financial resources, stable growth, and collateral, so it is supported by banks. Hopefully, with the unprecedented credit package implemented by the four state-owned commercial banks, the company will soon be able to borrow short-term capital at preferential interest rates to import more high-quality raw materials and components for production," Ms. Dien said optimistically.

Mr. Cu Van Thanh, CEO of Luong Quoi Coconut Processing Company Limited, said that lower interest rates help ease the burden on businesses because high interest rates make product prices uncompetitive, compounding the difficulties faced by businesses.

"Current interest rates are very high compared to other countries in the region. Vietnam has integrated into the global economy, competing not only in export markets but also domestically, with products from other countries being sold in Vietnam. If interest rates were reduced to a reasonable level, it would help businesses improve their competitiveness with goods from other countries in the region," Mr. Thanh analyzed.

The director of an agricultural production company in Ben Tre expects that the simultaneous reduction of lending interest rates by four major banks will prompt other banks to consider adjusting their rates in the near future. "The most important thing is whether banks reduce interest rates but also reduce the cost of borrowing for businesses. Because in the past, banks have announced interest rate reductions, but in reality, businesses still have to pay high costs to get loan approvals," this director said.

Speaking with a reporter from Nguoi Lao Dong newspaper on March 23, Dr. Nguyen Huu Huan from the Ho Chi Minh City University of Economics commented that the simultaneous launch of large-scale credit packages with reduced interest rates by state-owned commercial banks is a positive signal for the market and businesses.

However, a closer analysis reveals that the overall credit volume of the economy may not grow significantly. This is because there is a clear differentiation between small and large commercial banks. While large commercial banks have abundant liquidity and are ready to implement large-scale preferential credit packages to increase market share, smaller commercial banks still face liquidity difficulties.

"This will prevent businesses from settling loans at smaller commercial banks and switching to larger commercial banks with lower interest rates. In reality, since the beginning of the year, mainly large commercial banks have announced interest rate reductions, and the reduction wave has not spread much to smaller banks. Therefore, the State Bank needs to provide liquidity support to smaller banks to avoid a large disparity between commercial banks, which would make it difficult to manage monetary policy in the future," said Dr. Nguyen Huu Huan.

Regarding the low growth in credit in recent months, Dr. Nguyen Huu Huan believes the problem lies mainly with businesses. Weak market demand and economic recession in other countries have made production, business, and export activities difficult for enterprises. Lending interest rates have also not decreased significantly, making businesses less inclined to borrow new funds for reinvestment and expansion as before.

Moreover, many of the collateral assets are held by the bank to secure previous loans. Now, obtaining new loans without additional collateral is not easy, making it difficult to avoid situations where businesses refinance (paying off loans at high-interest banks to transfer to banks with lower interest rates).

Source: https://nld.com.vn/kinh-te/goi-tin-dung-lon-chua-tung-co-20230323215956194.htm