The capital cost for corporate borrowers has become the lowest in the past one-year as many banks have slashed lending rates to as low as the prime rate of 10% given their rich resources following the central bank’s credit loosening policy.
The State Bank of Vietnam says in a report that several commercial banks now offer lending rates of between 10% and 15%, after the central bank cut the prime rate from 11% to 10% this month and injected more capital back to banks by reducing the compulsory reserve by two percentage points.
The lowest lending rate now is similar to that at the end of last year, having fallen by six to 11 percentage points compared to the peak in June. In the middle of the year, many banks pushed lending rates to as high as 21% as they were allowed to charge a commercial rate 50% higher than the prime rate at 14% a year at that time.
Bank for Investment and Development of Vietnam (Bidv) now offers a preferential rate of 1 0% per year, or 0.83% per month, for corporate customers producing essential goods and small and medium enterprises. Other popular rates at the bank range from 11.5% to 13.5%.
Bank for Agriculture and Rural Development of Vietnam, meanwhile, gives loans at 10.92% per year while the lowest lending rate at Mekong Housing Bank is 10% per year.
Bank for Foreign Trade of Vietnam, or Vietcombank, says its lowest lending rate is 10.5% per year for exporters and effective corporate clients, while the other popular rates of the lender are from 12.5% to 13.6% per year.
Private banks have also followed suit, slashing their lending rates by 0.5 to two percentage points against the ceiling rate for good corporate clients.
These rates are 13.5% per year at Viet A Commercial Bank, 13% at Lien Viet Commercial Bank, and 13.75% at An Binh Commercial Bank.
The capital channel has become wider for other business purposes that were previously categorised as risky as well. These include loans for buying houses, stocks, and consumption.
Ly Xuan Hai, general director of Asia Commercial Bank (ACB), said that his bank was struggling to find outlets as demands now have fallen due to difficulties enterprises were facing due to the global crisis.
“The bank has new corporate customers but the number of clients paying debts before maturity are real big, making our credit growth nearly unchanged,’ he said, adding that ACB’s outstanding loans as of late November increased by about 20% from early this year.
This situation is common at many other lenders as well, as seen in the stagnant credit growth of all banks in HCM City. The outstanding loans of banks in the city as of late November was 490 trillion dong, up 20.6% from early this year and a mere 0.9% from the month earlier.
Meanwhile, lower borrowing rates are choking off the flow of savings in dong into banks. The common rate now hovers around 10% a year.
Ho Huu Hanh, director of the HCM City Branch of the State Bank of Vietnam, said that the mobilisation of dong funds in the city slightly fell compared to the previous month but the mobilisation in the US dollar rose strongly.
The total mobilised funds at banks in the city by late November had amounted to 564 trillion dong, up 15.9% from early this year and up 13.2% from the previous month.