After four state-owned banks pioneered to reduce lending rates by 0.5 percent to six percent per annum for five priority sectors, small and medium-sized banks have recently been making efforts to lower lending rates in order to retain customers.
According to banks, the reduction of lending rates in the current context may make banks’ profits to decline by several hundreds of billion dong this year, but it helps banks retain a good number of customers.
Talking to Thoi bao Ngan hang, general director of Nam A Commercial Joint Stock Bank Tran Ngoc Tam said that the bank is actively participating in the sector’s policy of cutting interest rates. Accordingly, NamABank spends about 1.5 trillion dong on preferential interest rate lending in 2019 for services, and manufacturing and export businesses. The preferential interest rates are around eight to 8.5 percent per annum, while they were always from nine percent per annum before the Lunar New Year holiday.
Particularly for the five priority areas and businesses rated A, the bank will consider cutting more interest rates for each specific case. At the same time, NamABank also spends one to 1.2 trillion dong on “Green credit” with preferential interest rate of only seven percent per annum. It is known that this credit package is funded by international organisations for lending to small and medium-sized enterprises and business households operating in agriculture and rural field.
Accordingly, businesses have a lot of opportunities to access cheap capital from this credit package. According to Tam, in 2019, NamABank will continue to balance the total credit limit to meet the capital needs of enterprises. Thus, businesses can freely come to the bank for borrowing at the most preferential interest rates.
Similarly, a deputy general director of Southeast Asia Commercial Joint Stock Bank (SeABank) shared that banks are having basis to lower lending interest rates for businesses. In particular, the Basel II regulations have helped many banks operate healthily. As a result, people have more confidence in banks and are willing to deposit money in banks at lower interest rates than 2018, from which many banks have the opportunity to reduce lending rates. Particularly for SeABank, the bank has applied a preferential interest rate policy for businesses operating in agriculture and rural development, exporters and small and medium-sized enterprises.
Up to this point, the proportion of lending to businesses in priority areas at SeABank account for around 20 percent of the bank’s total outstanding loans. SeABank’s representative added that the bank is applying interest rates from eight percent per annum to customers borrowing capital for coffee and pepper planting, shrimp farming, rice growing, etc., making it easy for customers to choose business plans and the preferential interest rate level.
Asia Commercial Joint Stock Bank (ACB), Vietnam Thuong Tin Commercial Joint Stock Bank (VietBank), Orient Commercial Joint Stock Bank (OCB), etc. also commit to further lower lending rates for production and business with interest rates of 0.1-0.5 percent per annum lower than what were applied before the Lunar New Year holiday.
Banks’ signals on cutting lending rates right after the Lunar New Year holiday will create positive effect to the market. According to NamABank’s general director, there were several hundred businesses applying for loans under the “Green credit” programme on the first few working days after the Lunar New Year holiday. In particular, a small and medium-sized business operating in packaging was approved a loan of 1.4 billion dong to buy machines and production lines that do not affect the environment at a lending rate of seven percent per annum maintained throughout the borrowing term.
Talking to some businesses and small traders that have registered information in the Programme for Connecting banks and enterprises in HCM City, businesses are receiving information that banks will continue to reduce interest rates to priority areas and businesses with good credit history.
According to Nguyen Hoang Minh, deputy director of the State Bank of Vietnam (SBV) HCM City branch, the lending rates to priority areas have been lowered by 0.1-0.5 percent per annum and many businesses have access to this credit source in the first month of the Lunar Calendar. Particularly, businesses having working capital loan contracts do not have to wait for the existing contracts to expire and still can enjoy the preferential interest rates.
