Sunday, May 26, 2024 9:52:43 PM - Markets open
VN-INDEX 1,261.93 -19.10/-1.49%
HNX-INDEX 241.72 -5.19/-2.10%
UPCOM-INDEX 94.40 -0.77/-0.81%
Old loans must endure higher interest rates temporarily: SBV
Vietnam News - 4/19/2024 5:09:35 PM
 (0 ratings. You must sign in to rate.)
The average lending interest rate for new loans by commercial banks is reported at around 6.4 per cent per year, a decrease of 0.7 percentage point per year compared to the end of last year. However, borrowers with loans issued before the latest rate adjustment still must pay higher rates, according to the State Bank of Việt Nam (SBV).
 
Đỗ Phước Tống, chairman of Duy Khánh Mechanical Company Ltd, said his company has a 7-year loan with an interest rate of 9 per cent per year. After minuscule decreases, the rate was only adjusted to 8.5 per cent per year.
 
While new loans have been issued at significantly lower rates, older loans, even for priority sectors such as mechanical engineering, must still bear high interest rates, especially during a period of economic difficulties.
 
He said banks also required his company to produce additional collateral or have their credit limit reduced as banks have been showing concern over the declined value of the properties.
 
"For the past two years, business has been tough, revenue has decreased significantly. Our profit is barely enough to cover the interest," he said.
 
Nguyễn Quốc Anh, director of the Đức Minh Rubber Company Ltd. and chairman of the HCM City Rubber Plastic Manufacturer Association, said his company is still paying back numerous loans with interest rates as high as 8.5 per cent per year for short term and 11.2 per cent per year for long term.
 
When confronted by borrowers, the banks said rate cuts for older loans would take a delay to implement but when asked how long the delay would be, none could provide a timeline.
 
"For businesses, long-term loans are for long-term investments. It will be difficult for them to produce a profit at higher interest rates," he said.
 
"Right now, the most pressing issue for businesses is a lack of orders from customers. While they must wait for demand to bounce back, the banks must support businesses to help them survive with rate cuts," he said.
 
Tô Thị Tường Lan, secretary-general of the Việt Nam Association of Seafood Exporters and Producers, said in 2022, the lending interest rate in US dollar was only about 2 per cent per year, then gradually increased to 4 per cent per year, and now has risen to 5.5-6 per cent per year. Meanwhile, exchange rates have been fluctuating significantly, causing disadvantages for companies borrowing in foreign currencies.
 
Explaining why the interest rate for new loans has decreased significantly but the interest rate for old loans is still too high, a director-general of a commercial bank, said last year after the SCB incident, commercial banks rushed to increase deposit interest rates, some offered even up to 9-10 per cent per annum to attract capital. At the time, many customers chose to deposit for 24 months or 36 months, and now banks are still paying high deposit interest rates as promised.
 
"This means that the capital raised at this high price must somehow remain profitable until the end of 2024, even until mid-2025. Even in the second quarter of 2024, many banks still bear high-cost capital from early 2023. However, as pressure gradually decreases, banks will also gradually reduce the interest rates for long-term loans for customers," he said.
 
How long it will take banks to bring down their interest rates also differs significantly. Banks that aggressively pushed medium and long-term loan products at the beginning of 2023 had to significantly increase long-term deposit interest rates, and now have to pay high interest for high-cost capital. However, banks that did not focus on attracting long-term deposits at the time will have an easier time now," he said.
 
Deputy Governor of the SBV Đào Minh Tú said in a recent statement that capital in the country's banking system remains abundant with full liquidity, even surplus with interest rates currently at a 20-year low, a great condition for businesses to borrow.
 
However, some commercial banks have not been able to bring down their rates, even as the central bank demanded public disclosure of interest rates, allowing people to pick the lowest rates.
 
"Since the end of 2023, the SBV has been directing commercial banks to further cut costs and profit targets to bring down interest rates, for both old and new loans," said the deputy governor. — VNS
 
Read original article here
Newer News
22/05 Finance ministry works with S&P on sovereign credit rating
13/05 Central bank's bid to stabilise gold market hits snag
08/05 Proposal of compulsory non-cash payment for gold transactions controversy
08/05 Three bidders win gold auction at high price
06/05 Bank deposits decline for first time in over two years
06/05 SJC gold price hits all-time high
24/04 Two bidders win the first gold auction this year
24/04 HCM City seeks to draw remittances in infrastructure
24/04 HCM City could issue bonds for overseas Vietnamese to fund infrastructure: conference
19/04 Overseas remittances to HCM City record highest increase in three years
Older News
19/04 Commercial banks raise deposit rates
16/04 Gold bar auction to be resumed after 11 years of suspension
16/04 Banks record positive business indicators in Q1 2024
12/04 Military Insurance targets top four spot in non-life insurance market for 2024
12/04 PM Chính requires strengthened gold market management
10/04 SJC gold price turns down, gold ring conquers new mark
05/04 Central bank reassures customer rights following $13.5m deposit loss
05/04 Việt Nam participates in ASEAN meetings, boosts financial and monetary cooperation
05/04 HDB: HDBank to pay 25% dividend in cash, stocks, aim for high growth in 2024
03/04 15 VN banks listed in Brand Finance Banking 500 2024 ranking
 
Newsletter Signup
Top Stories
VN adds over 110,000 new securities accounts in April, bringing total to 7.7 million
Cautious rise amid low supply and cash flow, investors advised to monitor resistance area
Interest rates to rise but not have major impact on stock market: economist
Businesses concerned about rising exchange rate pressure
Gold bar auction to be resumed after 11 years of suspension
Market Update
Last updated at 3:05:01 PM
VN-INDEX 1,261.93 -19.10/-1.49%
Real-time chart
Top 5 Actives
Top 5 Gainers
Top 5 Losers
My Favorite Quotes
Your most recently viewed tickers will automatically show up here if you type a ticker in the Get Quotes box on the top of the page.
Company Research
Type in the symbol above for thorough background information, key statistics and financial information.
Stock Sectors
We continuously improve our services, here are the latest updates...
Portfolio
Allow you to monitor a customised group of securities. You can set up multiple Portfolios to help you better manage your investments.
Trigger Alerts
Get up-to-date alerts delivered directly to your email address.
Stock Screener
Allow you to filter the market and find exactly what sort of company you are looking for.
Live Terminal
Get instant access to FREE REAL-TIME streaming quotes for hundreds of stocks from HOSE, HNX and UPCOM exchanges.