The lending rate at some state-run banks is now down to 10% a year. However, at joint stock banks it is still 15% a year. It is difficult for the joint stock banks to further lower the lending rate in order to boost lending activities.
State-owned banks such as the Bank for Investment and Development of Vietnam (Bidv) have announced their dong short-term lending rate of 10%-11.5% a year for all terms, from December 8th. The Bank for Industry and Trade of Vietnam (VietinBank) has announced the floor lending rate of 12% a year for short-term loans and 14% a year for long and medium term loans. In addition, VietinBank offers a preferential lending rate of 11% a year for exporters. The Bank for Foreign Trade of Vietnam (Vietcombank) offers a preferential lending rate of 10.5% a year for short-term loans and the common lending rate is 12.48% a year.
Some analysts forecasted that the lending rate is likely to be cut down to 10-11.5% a year which was the lending rate at this time, last year. But, officials of the joint stock banks say that only state-run banks have the lending rate of 10-12% a year. “The lending rate at joint stock banks will be around 13% a year, but it will have to wait till the start of 2009″, said a general director of a private bank in HCM City.
With the central bank’s reduction of basic rates, recently, joint stock banks do not seem inclined to further lower lending rates. At the Saigon Thuong Tin Bank (Sacombank), the lowest lending rate is 14.4% a year which is for the bank’s regular customers with VIP cards for new borrowers the ceiling lending rate is 15% a year.
The Vietnam International Commercial Joint Stock Bank (VIB Bank) said that at present, it has a ceiling lending rate of 15% a year for both new and existing borrowers.
An Binh Commercial Joint Stock Bank (ABBank) was the first bank among the joint stock banks to lower the lending rate for individual customers. But the bank’s lending rate for business and production activities (YOUshop) is 14.5% a year and the lending rate to support working capital (YOUshop-plus) is 14% a year.
“Some commercial banks that recently raced to raise the deposit rate fell into the interest rate trap. It is hard for them to adjust down the lending rate” said Ho Huu Hanh, director of SBV’ HCM City branch. However, banks need to balance between the deposit rate and lending rate to offer a reasonable interest rate benchmark, added Hanh.
At present, banks just consider lowering the deposit rate. From these new deposits, banks will calculate the lending rate. Some commercial banks have adjusted down the deposit rate such as at Sacombank, the saving rate was cut down to 9.54%-9.984% a year for 3-10 month terms and the lowest level was 8.4% a year for one-month deposit.
The Saigon Commercial Joint Stock Bank (SCB) applies a dong deposit rate of 12.3% a year for 3 and 4 month term deposits and five months at 12% a year. Customers with deposits worth less than 100 million dong with three-month term at Asia Commercial Joint Stock Bank (ACB) will enjoy the deposit rate of 9.45% a year and for six months 9.75% a year. The highest deposit rate in US dollar at Vietnam Export and Import Joint Stock Bank (Eximbank) is 5.2% per annum for a 12-month term.
At the Oriental Commercial Joint Stock Bank (OCB), the dong deposit rate was cut down by 0.9-2.6% a year whereby the one-month term deposit rate is at 10% a year, two months at 10.4%, 6 and 8 months at 10.3%, 12 months at 10.9% and 24 months at 8.9% a year. The interest rate is at 3.6% for demand deposit. The 12-month term deposit rate for the product of saving with flexible interest rate at OCB was reduced to 9% a year.