Lending interest rates are projected to fall sharply starting in the third quarter.

A representative from a major joint-stock commercial bank predicted that interest rates would uniformly fall to 15.5% in July and August.

Most assessments from banks and experts suggest that lending interest rates will only truly fall significantly from the beginning of the third quarter. Although lending rates for businesses are gradually decreasing, the reduction is still not as substantial or widespread as expected.

A representative from a major joint-stock commercial bank predicted that interest rates would uniformly fall to 15.5% in July and August.

He said that the loan packages with reduced interest rates announced by banks recently are mainly for priority groups, have not spread widely, or are only implemented by a few large banks that have lowered interest rates due to directives from the State Bank of Vietnam (SBV).

"The main challenge for banks in the first six months of the year is resolving bad debts. If this is fundamentally resolved, interest rates will fall significantly," this person affirmed.

Interest rates at Asia Commercial Bank (ACB) are currently at 17.5%. ACB General Director Ly Xuan Hai believes that lowering interest rates is an inevitable market need. He added that both banks and businesses want this to happen, so interest rates will likely decrease further in the near future.

Currently, according to Mr. Hai, banks are still assessing the capital absorption capacity of businesses and profit margins to determine appropriate interest rates, so they cannot reduce them significantly yet.

Speaking at a recent seminar, Dr. Tran Du Lich assessed that the recent interest rate reduction was slow, not fast. "If we wait any longer, by the time businesses reach a point of exhaustion and collapse, it will be too late to save them," Dr. Lich said. According to him, achieving the 15-17% credit growth target announced by the State Bank of Vietnam this year will be difficult because businesses will be very hesitant to borrow capital, fearing they will be unable to repay their debts due to the difficulties they are facing.

Speaking to Saigon Economic Times online, Mr. Pham Hong Hai, Director of Capital Markets and Money Markets at HSBC Bank, said that the State Bank of Vietnam's decision was anticipated by the market and will help reduce borrowing costs for individuals and businesses. This will help boost economic growth and is extremely necessary in the context of only 4.1% GDP growth in the first quarter.

Over the past period, interest rates in the interbank market have also decreased. For maturities under 3 months, the interbank market has been trading below 12% recently. Therefore, the State Bank of Vietnam's interest rate cut is entirely reasonable, bringing deposit interest rates closer to the real market interest rate.

Meanwhile, Mr. Vu Thanh Tu Anh, Director of Research at the Fulbright Economics Teaching Program, when discussing the view of capping lending interest rates instead of deposit interest rates, argued that no ceiling should be applied as it would distort the credit market.

He said that imposing interest rate caps would eliminate the basis for classifying customers and assessing bank risk. Currently, banks only have interest rates as their sole tool; for high-risk businesses, lending rates are high, while for low-risk businesses, rates decrease accordingly. Furthermore, imposing a ceiling on deposit interest rates would be unfair to depositors, especially small and medium-sized depositors (those with large sums of money still enjoy higher interest rates and can lend at the rates they choose).

Mr. Anh argued that when imposing interest rate restrictions, it's better not to block only one end, as that would certainly create problems, but to block both ends or remove both altogether. If interest rates are imposed, a ceiling of 12% should be set, and with a reasonable profit margin of 3-4%, the maximum interest rate would be 15-16%.

Imposing a single interest rate ceiling benefits a select group while the poor and small and medium-sized enterprises suffer. If interest rate caps were removed and the restructuring of the banking system were carried out effectively, there would be no interest rate race, because the State Bank of Vietnam would already know which banks are weak and would have taken close action to address them.

"The fact that the interest rate ceiling remains in place means that the restructuring process has not yet yielded results, and we will have to continue waiting," Mr. Anh said.

According to TBKTSG