Several banks have pulled down their lending rates but at a slower pace than deposit rate cuts, while stringent conditions still apply for borrowers.
Lending rates are hovering around 14-17 percent. Although banks have lending packages with soft rates of 11-13 percent, it is not easy for enterprises to access these packages.
BIDV as one of the banks with the lowest lending rates offers an interest rate of 13.5 percent per annum to corporate borrowers with triple-A rating, the highest credit grade. Other clients are given lending rates of 14-14.5 percent a year.
Military Bank (MB) has lowered the annual lending rate for the four priority groups of small and medium enterprises, supporting industries, agriculture and rural, and export firms to 12.5-13 percent. Meanwhile, its popular lending rates are 13.2-16.4 percent, a sharp decline against last month, but only healthy businesses can take out loans at such rates.
Eximbank has two preferential packages worth VND2 trillion each, one of which applies a lending rate of only 7 percent, but requires borrowers to cover any forex rate fluctuation of 3 percent or below during the lending term. If the volatility exceeds 3 percent, the lender will cover the excessive amount.
The other package of Eximbank provides clients belonging to the four priority groups with an interest rate of 13 percent.
Most of the credit officers that the Daily contacted said not so many enterprises could enjoy the lending rates below 14.5 percent as they failed to satisfy the requirements of lenders. In addition, lending rates tend to drop faster at large banks than small institutions.
A small bank in HCM City is quoting lending rates at 15-17 percent for the priority groups, versus 13 percent regulated by the central bank. Only a handful of clients are offered the rate of 13 percent per year, said the bank’s director.
According to a credit staff at the HCM City branch of a Hanoi-based bank with chartered capital of VND6 trillion, triple-A enterprises can enjoy the lending rate of around 14 percent, while others are imposed the rates of over 16 percent.
In comparison with the year’s beginning, lending rates have dipped 3-4 percentage points, while deposit rates have been slashed by five percentage points. The lending rates for the four priority groups are still higher than the 13 percent ceiling.
Most lenders pledged interest rates would be cut deeper in the third quarter when the cost of capital mobilisation decreases.
Credit operations have turned rosier in line with the interest rate downtrend. The total credits of the country had reached over VND2,617.3 trillion as of end-April, down 0.59 percent against late last year.
However, the central bank governor once stated credit would regain its growth momentum from May. In HCM City, the June credit volume picked up 1.94 percent against May.
Economic expert Le Xuan Nghia described bad debts as a big rock that hinders the credit flow into the economy. Therefore, interest rate cuts have yet to produce positive effects.
The establishment of a national debt trading company is a feasible measure to cope with bad debts. However, Nghia said it would take 1-2 years for bad debts to fall, and thus it would take more time until enterprises could benefit from lower lending rates.