Loan interest rates change direction, gradually going down

Many credit packages appear to reduce loan interest rates.

In contrast to the situation a year ago when banks no longer had credit limits for lending, leading to a blockage in the flow of credit from banks, a series of credit packages with preferential interest rates have now appeared. State-owned commercial banks have been the pioneers in reducing lending rates with a reduction of 0.5 - 1%/year.

For example, Vietcombank provides short-term production and business loans to individual customers and business households to supplement working capital for production and business with interest rates of 7.5%/year for loans with terms of less than 3 months; 7.8%/year for loans with terms of 3 to less than 6 months; 8.3%/year for loans with terms of 6 to less than 9 months; 8.6%/year for terms of 9 to less than 12 months; 8.8%/year for loans with terms of 12 months. VietinBank has also just announced preferential loan interest rates from only 7.1% to support production and business needs of individual customers. BIDV provides production and business loans with interest rates from 7%/year...

Lending interest rates gradually decrease

Many joint stock commercial banks have also joined the wave of reducing loan interest rates. For example, Viet Capital Bank cooperated with Responsibility Fund Management Company (Switzerland) to implement the "Green Credit" program with preferential loan interest rates from only 8.9%/year. The program has a limit of 500 billion VND for production, business and consumption projects that are environmentally friendly or aimed at protecting the environment and society.

Previously, Ban Viet has launched a series of programs such as the "Combo 3 incentives" loan package with a maximum interest rate reduction of up to 2%/year, the "Flexible 24-hour loan" product with same-day disbursement for urban businesses and preferential loan interest rates of 10.5%/year... Or SeABank reduces interest rates by up to 1%/year for existing and new loans.

Specifically, SeABank has reduced interest rates by 0.5% per year for all existing individual loans. For new loans with collateral, the interest rate is reduced by 0.7 - 1% per year, with the highest reduction of 1% per year applied to short-term loans under 6 months. In particular, SeABank has allocated VND3,450 billion to implement a preferential interest rate program from 9.29% per year for consumer loans to buy houses and cars. LienVietPostBank has allocated VND15,000 billion for loans with interest rates reduced by 0.5 - 1% from now until September 30, of which VND5,000 billion is for businesses and VND10,000 billion is for individuals.

Interest rates on loans are gradually decreasing.

According to the State Bank of Vietnam, as of April 28, outstanding credit to the economy was more than VND12.28 trillion, up 3.05% compared to the end of 2022 and up 9.78% over the same period. Thus, banks pumped about 1% of credit into the market in April, equivalent to VND118,000 billion. The credit growth rate in the first four months of 2023 was less than half that of 2022. In Ho Chi Minh City alone, credit growth in April increased by 0.65%, down from the 1.37% increase in March.

The high interest rate level in the first months of the year is the cause of the slowdown in lending. In the first quarter of 2023, Vietcombank's credit balance increased by only 2.5%, reaching about VND 1,165 trillion; capital mobilization increased by 3.1% compared to the end of 2022. Compared to the first quarter of 2022, Vietcombank's credit growth in the first quarter of 2023 was only about 1/3, while mobilization was approximately. At BIDV, by the end of the first quarter of 2023, credit balance reached over VND 1,57 trillion, credit growth was slightly higher than last year, up 5%; capital mobilization reached over VND 1,650 trillion, up 2.3%. ACB's credit growth decreased slightly by 0.6% compared to the beginning of the year.

Mr. Nguyen Thanh Tung, General Director of Vietcombank, said that the lending rate for businesses and individuals has decreased compared to before when the lending interest rate level has increased, in which the lending rate for individuals to buy real estate has decreased compared to before. After the decision to reduce lending interest rates in the first 4 months of the year, Vietcombank recently decided to reduce another 0.5%/year until July for more than 600,000 billion VND of outstanding loans with about 110,000 customers. To have a basis to reduce lending interest rates in the coming time, Vietcombank and some large banks have directed to further reduce mobilization interest rates in May to have the basis to reduce lending interest rates. It is expected that the mobilization interest rate will decrease another 0.3%/year in May.

Loan interest rates have decreased but not enough | Economic Movement

Speaking at the 2023 Banking Panorama Forum with the theme "Managing monetary policy in the face of global economic variables" organized by the State Bank of Vietnam and Saigon Economic Magazine on May 10, Dr. Can Van Luc, chief economist of BIDV, commented that in 2023, thanks to the good foreign currency supply from remittances; stable FDI disbursement; the psychology of hoarding USD has significantly decreased when the interest rate of VND is higher than that of USD, attracting depositors to transfer savings to VND... The State Bank of Vietnam has bought foreign currency to help increase foreign exchange reserves, so the pressure on exchange rates in 2023 will ease. This expert assessed that monetary policy should shift from being tight and cautious to being cautiously loose to support growth; reduce interest rates, increase access to capital, restructure debt, as well as support liquidity, and promote restructuring of banks. However, Mr. Luc also commented that the state of "cheap money" will no longer be the same as before because the picture of the global economy has changed after the Covid-19 fight.

Although banks have accelerated interest rate reductions, according to experts, current interest rates are still high compared to the health of the business community. In particular, the first quarter profit picture with a series of banks pocketing soaring profits in the context of a difficult economy is still controversial when public opinion believes that there is no real sharing between banks and people, businesses, their own customers. Therefore, lending interest rates must continue to be pulled down to support production and support increased purchasing power in the market.

Reduce INTEREST RATE for social housing loans

On May 10, the Prime Minister signed Decision 486 on preferential lending interest rates at the Vietnam Bank for Social Policies applicable to loans with outstanding balances for purchasing, leasing, building new or renovating houses for housing at 4.8%/year (down 0.2% compared to the old rate). This interest rate applies from May 10, 2023 to December 31, 2024.

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