With lending interest at 15%/year and deposit interest of only 9%/year, the banks are enjoying a difference of 6%/year.
According to a banking specialist, assuming that with 100 dong of capital deposit for less than12-month tenor at the interest rate of 9%/year, as per Decision No 581/2003/QD-NHNN dated June 9, 2003, the spending on credit risk provision would be 3%, liquidity reserve at 10 percent and the bank has only 87%, equalling to 87 dong.
Thus, the real interest rate of one dong of capital deposit for lending without other costs is calculated at 9 percent : 87 percent = 10.34 percent (1) plus another cost of 0.75 percent general provision per one dong of raised capital (2). We will take (1) plus (2) and have the result of 11.09%.
In addition, credit institutions have to pay a series of expenses such as asset depreciation, saving product designing cost, office leasing rent, network transmission and communication fee, marketing, salary, which are equal to 1 percent of one dong of raised capital.
In summary, the actual cost of each dong of raised capital at credit institutions is up to 12.09 percent in total. In comparison with the lending interest rate proposed by the State Bank of Vietnam (SBV) at 15 percent per year, the actual interest rate gap between saving and lending activities (excluding corporate income tax) is 2.91%, but not 6 percent as mentioned.
Moreover, recent 3-4 months tenor deposits with the interest rate of 12 percent – 13 percent – 14%/year, commercial banks can not apply 9 percent of limited deposit interest rate right now.
In addition to elements relating to capital costs as mentioned above, during operation, each loan in group 2, 3, 4 and 5 has to be set up the provisions under loan classifying regulations and risk provisioning regulations of SBV
Thus, commercial banks have recently had to pull every money unit to maintain their operations and reach the profit target which Board of Management has made.