Several commercial banks announced early on 11 July interest rate relaxation for existing loans as per Governor of the State Bank of Vietnam (SBV)’s request.
VietinBank has cut down on interest rates of all old loans to 15pct at most which will take effect since 15 July.
Likewise, SHB will make interest rate adjustments for current loans charged above 15pct regardless of individual or corporate customers and which sector of business they are in. The rates would soften to 15pct at most and probably lower on internal auditing, said general director of SHB Nguyen Van Le.
“Surely such changes would hurt banks’ profits. Long-term deposits which were fixed at interest rate of 14pct since the beginning of the year have yet reached maturity, thus implying banks’ continued interest payment for such amounts. Yet, given the current business difficulties, operational safety rather than profits should be lenders’ priority in order to partly ease burdens on businesses”, he said.
Given the gloomy economic outlook, shareholders had better be sympathetic as they are enterprises who should be well aware of the present difficulties, he added.
Another general director of a small Hanoi-based bank expressed concerns over the flat rate as lenders’ conditions would differ. Presently, almost all small banks could hardly enjoy favourable conditions as state-owned large ones whose non-term deposits normally account for some 30pct-40pct of their total amount of capital. Unlike small commercial banks which attract capital principally from residents at higher expenses, giants’ relatively low rates of such deposits would therefore pull down average capital costs. Therefore, many smaller banks are likely to post losses for this year due to the flat rate of 15pct.
Despite different opinions on the matter, it is very likely that easing interest rates for existing loans could be compulsory.