Till July 27, 2012 the total outstanding loans at the interest rate of above 15 percent per year was 32.8 percent of the total loans, falling strongly against the figure of 65.3 percent on July 15, the local Newswire Thoi Bao Ngan Hang reported, citing Nguyen Thi Hong, head of the Monetary Policy Department under the State Bank of Vietnam (SBV) as saying at the regular cabinet meeting in July 2012.
This figure showed that in fact, the central bank’s policy to reduce the lending interest rate to maximum 15 percent per year for old loans has very quickly reached the consensus from credit institutions.
Information from the department showed that within a few weeks after the central bank’s proposal, commercial banks have directed the whole system to reduce the lending interest rate for old loans to the highest of 15 percent per year.
For example, Vietnam Commercial Joint Stock Bank for Foreign Trade (Vietcombank-VCB) has directed its system to lower the lending interest rate for all old loans to maximum 15 percent per year except some co-financing loans that are under negotiation to adjust down in the near future.
Vietnam Commercial Joint Stock Bank of Industry and Trade (VietinBank-CTG) has also been in a hurry to adjust the lending interest rate for old loans to 15 percent per year as proposed by the central bank, but some loans for projects and consumer loans, debts in Category 2 and bad debts have not been adjusted as of the time of reporting.
Bank for Investment and Development of Vietnam (Bidv) and Vietnam Bank for Agriculture and Rural Development (Agribank) have also adjusted down the lending interest rate for businesses and households, but have not lowered the lending interest rate for individual consumer loans.
Synthesising the reports from 35 credit institutions with 70.7 percent of the market share, the Monetary Policy Department said that as of July 27, the total outstanding loans in dong for prioritised sectors (with interest rate of less than 10%) accounted for 1.9 percent and the interest rate of 10-13 percent per year accounted for 15%.
Particularly, the medium and long term loans for prioritised sectors and loans for other business and production and consumer loans with interest rates of over 13 percent per year to 15 percent per year accounted for 50.3 percent and at the interest rate of over 15 percent per year amounted to only 32.8%, strongly falling against the figure of 65.3 percent as of July 15.
Amongst four state-owned banks, the proportion of loans at the interest rate of above 15 percent per year at Vietcombank, Bidv and Vietinbank was at very low level, at 2.2%, 4.8 percent and 5.7 percent respectively. Meanwhile, at Agribank, there are still 50 percent of loans at the interest rate of above 15 percent per year mainly in individual consumer loans.
Thus, the average proportion of loans at the interest rate of more than 15 percent per year of state-owned banks was 23%, down 38 percentage points from July 12 (compared to 61%), marking the bigger reduction in the banking system.
According to Hong, the reduction of interest rate to maximum 15 percent per year for old loans will lead to decrease in profit margin ratio of banks.
“However, the entire banking system is also aware that this expressed the unanimity in sharing hardships with enterprises in the current difficult conditions to be able to regain economic growth” Hong said.