Unprecedented large credit package

With the aim of supporting customers to access preferential loans to promote production and business, contributing to the goal of restoring economic growth and removing difficulties for enterprises, all four state-owned commercial banks have jointly implemented 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 VND100,000 billion with an interest rate of 7.1%/year to support the production and business needs of individual customers. The credit package is implemented from now until June 30, with a maximum loan term of 12 months.

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 subjects of application are businesses with effective business operations, in need of short-term loans to supplement working capital for production and business or to borrow capital to support export activities.

The program lasts from now until June 30. "The program is implemented for short-term loans (under 12 months), with interest rates up to 1.5% lower for loans disbursed in VND and 1% lower for loans in USD compared to current interest rates, depending on each loan term and specific business profile" - said an Agribank representative.

Vietcombank has launched a VND100 trillion credit package to supplement working capital with an interest rate of 7.5%-8.6%/year. Photo: THY THO

Another "big guy", the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), has launched a loan package of up to VND170,000 billion for individual customers, meeting the demand for consumer loans and production and business loans. Specifically, from now until December 31, BIDV will deploy a medium- and long-term credit package of VND100,000 billion, with an interest rate of 9.5%/year for individual customers to borrow capital for consumption, car purchases or production and business.

In addition, BIDV has deployed loan packages of VND 70,000 billion, with interest rates from 7%/year, to meet capital needs for production and business purposes of customers in 2023 with terms of less than 12 months. Of which, VND 20,000 billion applies to individual customers with capital needs in the agricultural and rural sectors; and the VND 50,000 billion package is for individual customers with capital needs for production and business in all sectors, from now until May 31, with interest rates from 7.5%/year for loans with terms of less than 6 months and from 8.5%/year for loans from 6 months to 12 months...

Finally, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) has implemented a VND100,000 billion credit package to lend additional working capital with an interest rate of 7.5% - 8.6%/year for loans from 3 months to 12 months.

Need to reduce costs further

Ms. Nguyen Thi Dien, General Director of An Phuoc Garment and Embroidery Company Limited, said that An Phuoc depends heavily on loans to buy 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 tried to balance and find loan sources with suitable interest rates.

The company also has good financial resources, stable growth and secured assets, so it is supported by banks. Hopefully, with the "unprecedented" credit package jointly implemented by 4 state-owned commercial banks, the company will soon be able to borrow short-term capital with preferential interest rates to import more high-quality raw materials for production," Ms. Dien said optimistically.

Mr. Cu Van Thanh, CEO of Luong Quoi Coconut Processing Company Limited, said that the reduced interest rate helps ease the burden on businesses because high interest rates make product prices less competitive, making businesses' difficulties even more complicated.

"Current interest rates are very high compared to other countries in the region. Vietnam has integrated globally, competing not only in the export market but also at home, with products from other countries being sold in Vietnam. If interest rates are reduced to a reasonable level, it will 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 hopes that the simultaneous reduction of interest rates by four major banks will lead to other banks considering adjusting interest rates in the near future. "The most important thing is whether banks reduce interest rates but also reduce the cost of lending to businesses. Because recently, banks have also announced interest rate reductions but in reality, businesses still have to pay high costs to get loans approved," said the director.

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

However, if analyzed carefully, we will see that the total credit scale of the economy may not grow much. Because there is a clear differentiation between small and large commercial banks. While large commercial banks have abundant liquidity and are ready to deploy large-scale preferential credit packages to increase market share, small commercial banks still face liquidity difficulties.

"There will be cases where businesses pay off loans at small commercial banks to switch to large commercial banks with lower interest rates. In fact, since the beginning of the year, mainly large commercial banks have announced reductions in lending interest rates, but the reduction has not spread much to small banks. Therefore, it is necessary to have liquidity support from the State Bank for small banks to avoid too large a gap between commercial banks, which will make it difficult to operate monetary policy in the coming time," said Dr. Nguyen Huu Huan.

Regarding the low credit growth room in recent months, Dr. Nguyen Huu Huan said that the problem lies mainly with the business side, when the demand in the market is weak, the economic recession of countries makes production - business and export activities of businesses difficult. Lending interest rates have not decreased much, so businesses are not interested in borrowing new loans to reinvest and expand production - business as before.

Not to mention, all the collateral is at the bank to secure previous loans. Now, it is not easy to borrow new capital without additional collateral, so it will be difficult to avoid the case of enterprises rolling over debt (paying off loans at high-interest banks to switch to banks with lower interest rates).

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