Businesses are worried about rising interest rates.

Many joint-stock banks continued to raise deposit interest rates by 0.2-0.3% last week, causing businesses to worry that lending interest rates will also increase.

The leader of a garment company in Tan Tao Industrial Park, Ho Chi Minh City, said that at the end of 2015, his company borrowed 10 billion VND from a bank to expand production at an interest rate of 10% per year, which was subject to adjustment after one year.

He stated that the company could tolerate the current interest rate, but there was only about a month left before banks would switch to floating interest rates. "With input costs at some banks slightly increasing recently, I fear that lending interest rates will be adjusted upwards, which would negatively impact product costs and business operations," he worried.

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The director of an agricultural processing and export company in Ho Chi Minh City also stated that, in the current challenging economic climate, it is not easy for businesses to achieve a 10% profit margin. "If lending interest rates rise higher than this, businesses will not be able to withstand it," he said.

Speaking with VnExpress, Mr. Pham Ngoc Hung, Permanent Vice Chairman of the Ho Chi Minh City Business Association, analyzed that businesses can currently be divided into three groups: highly reputable, low-reputable, and unreliable. Accordingly, unreliable businesses are almost unable to access loans from banks, so they mainly raise capital from employees, friends, and relatives...

Businesses with high and low credit ratings can easily borrow from banks, but they will face different interest rates. For well-rated businesses, the average lending interest rate in the first year currently ranges around 8-10% for medium to long-term loans (after which it floats according to the market). Businesses with low credit ratings, however, have to borrow at a relatively high average rate of 11-12% per year.

Sharing his views on this issue, the General Director of HSBC Vietnam, Pham Hong Hai, stated that lending interest rates have decreased slightly since the beginning of the year. However, he acknowledged that the market is currently divided into two very distinct groups of customers. One group consists of good customers, and banks are fiercely competing to attract them with low interest rate policies. "Banks are even accepting loans to good businesses at interest rates equal to or lower than deposit rates," Mr. Hai said.

Regarding small and medium-sized enterprises (SMEs) facing financial difficulties, the CEO of HSBC Vietnam stated that the bank is somewhat hesitant to lend to them. This is because, for this group, banks would have to offer relatively high interest rates to compensate for the risks involved.

Regarding the recent increase in deposit interest rates by some banks, Mr. Hai believes it may simply be a move to rebalance capital sources and the loan-to-deposit ratio. In reality, some banks have a relatively high loan-to-deposit ratio, so they have to increase deposits (raise interest rates) to reduce this ratio and ensure safer liquidity.

"However, this is only a small number. The majority of other banks are maintaining low deposit interest rates, so lending interest rates will remain stable in the coming period without much fluctuation," Mr. Hai predicted.

According to VNE