Want to be in the loop?
subscribe to
our notification
Business News
BANKS SLASH INTEREST RATES
The bank also launched a VND300 billion ($13.4 million) loan package to support companies’ business expansion and credit quality. According to Vietcombank, this package was made possible thanks to the bank’s cuts in operational costs, strong risk management, and maximised efficiency.
BIDV, another primarily state-owned bank, has also slashed its short-term lending rates by 0.5 per cent for selected customers. Mid-to long-term loans for manufacturing and business purposes can now enjoy rates lower than 10 per cent a year, down from the previous 10-11 per cent. Vietinbank, Agribank, Saigon-Hanoi Bank and many others have since followed suit.
The decision came after Prime Minister Nguyen Xuan Phuc met with 300 firms in Ho Chi Minh City on April 29. At the meeting, the PM asked the State Bank of Vietnam (SBV) to maintain reasonable interest rates for manufacturing and business loans, keep foreign exchange rates under control, and closely assist the business community in Vietnam.
Representing businesses at the meeting, Vu Tien Loc, chairman of the Vietnamese Chamber of Commerce and Industry, expressed his concern about high lending rates.
According to Loc, although businesses in Vietnam are still struggling – with 58 per cent reporting losses in 2015 – borrowing costs remain the highest in ASEAN.
“The current inflation rates are under 1 per cent, but firms can only borrow with an 8 per cent minimum interest rate, which is absurd and cumbersome. I suggest that the banking sector lower its lending rates by at least 1 to 2 per cent to support businesses,” Loc reported.
Tran Bac Ha, chairman of BIDV, replied at the meeting that reducing lending rates would hurt the bank’s annual revenue by approximately VND400 billion ($17.9 million), as depository rates are already standing at 6 to 7 per cent. However, Ha stressed that BIDV is willing to share the burden with firms, and proposed some necessary actions to cut lending rates.
“I believe that this goal requires a combined effort from all sides. Firstly, the SBV should lessen the cash reserve ratio and refinancing rates, so that banks have sufficient funds for lending and operating. Secondly, to reduce pressure on interest rates as a whole, the government should consider releasing fewer governmental bonds. Thirdly, the banks themselves should trim their operational costs to improve the net income margin,” said Ha.
SBV Governor Le Minh Hung noted that lending rates have already dropped by 60 per cent compared to 2011, when Vietnam experienced soaring inflation. However, Hung said, the central bank understands that the rates are still high for firms suffering in an unfavourable business climate, and so will work with financial institutions to maintain flexible monetary policies.
The SBV governor pointed out some obstacles that may prevent banks from further rate cuts. These include rising inflation rates, high depository rates, and foreign exchange pressures. The huge pile of non-performing debts is another long-standing problem that must be tackled as soon as possible.
Source: VIR
Related News
![Card image cap](/uploads/news/Security.jpg)
2025 PIVOTAL FOR STOCK MARKET UPGRADE EFFORT
The Ministry of Finance (MoF) is expected to soon publish the entire content of the draft circular amending and supplementing four circulars on transactions, registration, depository, and clearing, as well as operations of securities companies and information disclosure. This move, along with feedback and explanations, aims to meet the criteria for upgrading Vietnam’s stock market.
![Card image cap](/uploads/news/bn-01.jpg)
VIETNAM INTENSIFIES E-COMMERCE TAX SCRUTINY
The department plans to offer guidance for and hold direct dialogues with e-commerce taxpayers to ensure compliance. Efforts will also include updating the e-commerce database, conducting risk analysis, and leveraging artificial intelligence (AI) to manage data and issue alerts.
![Card image cap](/uploads/news/eco2.jpg)
FOOTWEAR EXPORTS SEEN REACHING US$27 BILLION THIS YEAR
This optimistic forecast reflects the industry’s efforts to expand and diversify its markets. Lefaso indicated that Vietnam’s footwear sector will concentrate on traditional markets like the U.S. and the European Union, alongside markets with free trade agreements to maximize opportunities.
![Card image cap](/uploads/news/FDI.jpg)
FDI INFLOW INTO VIETNAM REACHES NEARLY 15.2 BILLION USD
Vietnam attracted nearly 15.2 billion USD in foreign direct investment (FDI) in the first six months of this year, a year-on-year increase of 13.1 per cent, according to the General Statistics Office.
![Card image cap](/uploads/news/Eco4.jpg)
GDP GROWTH REACHES 6.42 PC IN FIRST HALF
Vietnam's economy grew by 6.42 pc in the first six months of 2024, slightly lower than the figure of 6.58 pc in the same time of 2022 within the 2020-2024 period.
![Card image cap](/uploads/news/Eco3%20%281%29.jpg)
CAPITAL FLOWS STRONGLY INTO INDUSTRIAL REAL ESTATE
Industrial real estate has had easier access to bank credit since July, when the State Bank of Vietnam (SBV) reduced the credit risk coefficient for industrial real estate from 200 per cent to 160 per cent, encouraging commercial banks to lend to more projects in the segment.