With pressure on negotiated interest rates still on the threshold of 20 percent per year, customers do not dare to use loans for consumption purposes by the end of the Lunar year.
According to bankers’ forecast, it is more likely that banks will find it difficult to reduce interest rates in the first half of 2011 until the inflation is tamed.
Compared with the middle of 2010, banks have been more open in providing personal consumer credits, with the quota level higher and capital repayment period extended up to 15-20 years.
Credit conditions are easing as well.
Greater Asia JS Bank (DaiA Bank) has implemented an overdraft loan programme, with limited capital for business customers up to 10 billion dong to meet temporary capital deficit needs without additional borrowing procedures. As for individual customers, DaiA Bank overdrafts three-month salary with the highest amount at 100 million dong and 12-month term.
However, to obtain funds from the bank’s overdrafts, personal customers have to pay interest rates of up to 20 percent per year. Meanwhile, the loan rate for corporate clients is 18.8 percent per year.
The matter is the interest rate of 20 percent being applied to individual customers at most banks, which has made customers who have high end of the year capital demand for consumption not be able to use loans for shopping purposes.
As a director of a bank’s personal customer banking department in HCM City, in the context of the current market, though still knowing that high negotiated interest rates will be difficult to stimulate growth in outstanding loans, banks cannot cut down the rates because of the high cost of raised capital.
Remarkably, in financial leasing companies, the loan interest rates for personal credit have been excessively high, exceeding 20 percent per year.
As the banks always have disposable funds available, Export-Import JS Bank of Vietnam (Eximbank) and Asia Commercial Bank (ACB) also have planned to boost capital to strengthen customer support by the end of the Lunar year. However, outstanding consumer loans at these banks in recent months have grown slower than expected for the New Year occasion.
Bui Tan Tai, deputy director of individual customer department of ACB, said that one of the reasons why individual customers were afraid to use bank loans for consumption purposes by the end of the year was too high lending interest rates.
Tai said that the negotiable interest rate that ACB is applying to individual customers varies 18-19 percent per year. This is considered a relatively competitive interest rates for personal loans on the market currently, but outstanding personal growth is still slow at ACB.