Banks will reduce old loan interest rates by 0.5%.

Commercial banks are expected to reduce lending rates by 0.3-0.5% for all existing customers, effective from May 29.

The group expected to cut interest rates next week will focus on private banks that have not adjusted interest rates on old loans since the beginning of the year. This move comes after a meeting between bank leaders and the State Bank on May 25.

The State Bank has recently held regular meetings with commercial banks, requiring those with high interest rates and large differences compared to input rates to make adjustments to support people and businesses in difficult times.

Transactions at a joint stock bank headquartered in Hanoi , morning of November 14, 2022. Photo: Thanh Tung

Previously, the group of state-owned banks and some private banks proactively reduced interest rates for old loans. Specifically, Vietcombank has reduced interest rates twice for existing loans, applied from the beginning of the year to the end of July. Agribank reduced interest rates by 0.5% for medium and long-term loans from May 15 to September 30. In the private group, ACB reduced from 0.5% to 2% for old customers whose loans are due for interest rate changes.

According to the Government 's report, the average new lending interest rate in the first three months of the year was 9.3%, but data from the National Financial Supervisory Commission shows that the average lending interest rate at 35 commercial banks by the end of March was about 10.23%, 0.56 percentage points higher than the end of last year.

On May 25, the State Bank reduced the ceiling interest rate for deposits under 6 months to 5% per year. This is the second time the regulator has reduced the ceiling interest rate since the beginning of the year. Previously, in early April, the ceiling interest rate for deposits of 1-6 months was adjusted from 6% to 5.5%. On March 14, the State Bank also reduced 1% of operating interest rates including rediscount and overnight lending.

According to the State Bank, this is an "important step, orienting the market's interest rate reduction trend in the coming time". This is a signal for banks to reduce lending rates. At the same time, adjusting the ceiling interest rate for deposits in VND with terms from 1 to less than 6 months also helps banks reduce input costs. From there, banks have favorable conditions to reduce lending rates, increase access to capital for businesses and people, contributing to promoting economic growth.

Quynh Trang

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