The latest figures released by the State Bank of Vietnam (SBV) showed that by the end of April, credit institutions had rescheduled debt repayments, keeping the debt group for more than 170,000 customers with a balance of approximately 130 trillion dong. Along with that, more than 14,000 individuals and businesses with outstanding loans of approximately dong 29 trillion dong had been exempted from interest rates by banks, keeping the debt group unchanged.
Remarkably, the management agency said that there were 318,000 customers with the existing debt of over 980 trillion dong that were lowered interest rates by banks. In particular, the typical interest rate reduction was from 0.5 percent to 2%. Even some credit institutions had reduced interest rates to 2.5 percent and over four percent for customers. Besides, these banks also provided new loans with interest rates lower than regular interest rates of 1 percent to 2 percent to about 150,000 customers, and loan sales reached over 500 trillion dong.
According to management, in the average interest rate lowered of nearly 1 quadrillion dong of existing loans by one percent, commercial banks’ profit would drop by at least 100 trillion dong in this year. This was a small number compared to the earnings of the group of banks generated annually.
Data from SSI Research said that the group of commercial banks listed on the stock market in 2019 only recorded a total of 110.662 trillion dong net profit after tax.
Concerning new loan support packages, reducing lending interest rates of existing banks, many businesses said it was difficult to access these cheap incentives despite being affected by Covid-19. In this regard, Can Van Luc said that the bank’s restructuring of debts, as well as the disbursement of the low-interest credit package of 300 trillion dong, needed a common voice of both businesses and banks.
For example, to enjoy the preferential debt rescheduling and interest rate reduction of 1 percent to 2%, businesses should be willing to prove the damage caused by Covid-19, rather than considering it as a condition and a bank procedure to make it difficult, said Luc.
The expert also said that banks accepted to reduce profits to support businesses, so they must support the right object. Otherwise, banks would be responsible for the inspection and examination. Not to mention, banks mobilised deposits from people, so lenders must also be cautious to preserve capital.
Le Duc Tho, Chair of the Board of directors of Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), said that lowering the credit standard would have bad debt consequences. However, the bank was still trying to disburse capital as fast as possible for businesses in essential areas. The bank had instructed to reduce interest rates by 2 percent to 2.5 percent per year compared to normal levels. The remaining cases depended on the class affected by the epidemic, down from 0.5 percent to 1.5 percent per year, Tho stressed.
Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) Chair Nghiem Xuan Thanh also said that each bank had the different financial capacity, so the interest rate reduction was also extra. Particularly Vietcombank had accepted to reduce 2.24 trillion dong profit to share with businesses affected by Covid-19 this time.
Vietcombank’s leader also added that the bank was the party that mobilised capital and landed money; at the same time, it still had to cut costs and keep operations safe. This explained why some businesses had unsecured business plans, no equity capital and could not access capital yet.
Vietcombank was willing to share profits, increase digitisation to serve faster, but not reduce credit standards, because, in this context, this would lead to a lot of risks, Thanh said.
