Lower interest rates - "golden opportunity" for businesses

(Baonghean) - Entering March 2015, banks have lowered interest rates. This move is said to be in response to the call for further reduction of medium and long-term lending interest rates by 1-1.5%/year this year by the head of the Vietnamese banking industry; at the same time, it brings the expectation that interest rates may be adjusted even lower in the near future...

Transaction at Saigon Commercial Bank Branch.

In the context of a weak economy, limited capital absorption capacity of enterprises, and interest rates continuously adjusted to the lowest level in recent years, it has demonstrated the Government's determination to operate a stable and flexible monetary policy in each period, contributing to curbing inflation and creating conditions for enterprises to access cheap capital sources for investment in production and business, ensuring good competition in the market.

Through practical research at banks in Nghe An, in the past week, banks have flexibly reduced deposit interest rates by about 0.4 - 0.5%/year. Although the State Bank has not issued a document directing a specific interest rate reduction, commercial banks have flexibly adjusted interest rates based on the actual capital needs of the market and ensured a balance between input and output.

At the Bank for Investment and Development of Nghe An Branch (BIDV), the current interest rate for deposits with terms of 1 month to 11 months ranges from 4% - 5.4%/year. For deposits with terms of 12 months or more, the maximum applicable interest rate is equal to the ceiling rate prescribed by BIDV Central (6% - 6.3%/year). The maximum applicable interest rate for short-term deposits is equal to the ceiling rate prescribed by the State Bank. Thus, the deposit interest rate for some terms has decreased from 0.1% - 0.5%/year compared to the beginning of the year. As for lending interest rates, since December 2014, the Branch has adjusted a reduction of 0.5%/year for all terms for customers; by January 2015, it continued to adjust a reduction of 0.5%/year for customers classified as A or higher.

In addition, BIDV Nghe An also has preferential interest rate credit packages for businesses borrowing for a term of less than 6 months with interest rates from 5.5% - 8%/year. Package for micro-sized businesses, lending interest rates under 9.5%/year. The preferential retail package and the retail package welcoming the Year of the Goat have interest rates reduced by 0.5/year. By the end of February 2015, there will be a slight reduction in terms of less than 3 months, with a reduction of 0.2 - 0.5%/year to stimulate and support customers and businesses borrowing capital to trade goods during the 2015 Lunar New Year.

Ms. Le Thi Mong Ly, Deputy Director of BIDV Nghe An, said: The adjustment towards gradually reducing interest rates has actively supported businesses and customers to access cheap capital, serving production and business effectively. Up to this point, the branch's outstanding credit has increased by more than 100 billion VND compared to the beginning of the year, an increase of 2.6%, mainly increasing credit for traditional businesses, retail customers also increased slightly. Capital mobilization increased by 130 billion VND, an increase of 2.6%, mainly increasing deposits from residential customers. BIDV Nghe An strictly complies with regulations on deposit interest rate ceilings, always has moves to reduce loan interest rates, especially has separate incentive packages suitable for each customer group.

At Agribank Nghe An branch, deposit interest rates for specific terms are listed as follows: 1 month: 4%/year; 3 months: 4.8%/year; 6 months: 5.3%/year; 12 months: 6%/year; 24 - 36 months: 6.3%/year. Lending interest rates for the needs of the production and business sector, apply a maximum short-term lending interest rate of 7%/year for the target group according to Circular 08/2014/TT-NHNN. Apply a maximum short-term lending interest rate of 10.5%/year for loans in other production and business sectors. Medium and long-term lending interest rates, apply from 8.5% - 10%/year for the target group according to Circular 08/2014/TT-NHNN...

Mr. Phan Hoang Lan, Deputy Head of General Planning Department of Agribank Nghe An shared: Recently, the branch has adjusted the interest rate down for the 3-month term, with a reduction of 0.2%/year, while other terms have been adjusted down since before Tet. Although the mobilization interest rate has decreased, the mobilized capital has still increased significantly; as of March 11, 2015, the total capital of the branch reached 15,746 billion VND, an increase of 63 billion VND compared to the beginning of the year. Meanwhile, the outstanding debt is 12,556 billion VND, a decrease of 100 billion VND compared to the beginning of the year. This fact is also in the annual rule, that is, normally in the first quarter, credit demand decreases, capital mobilization increases, because at this time, businesses and individual customers have not yet boosted production and business. Attracting increased deposits will create favorable conditions for banks to better serve capital demand in the last months of the year.

Manufacturing plastic door frames at Austdoor Nghe An Joint Stock Company.

Sharing the same trend of interest rate reduction, Saigon Commercial Joint Stock Bank Branch applies the interest rate for deposits under 6 months at 5.5%/year; 6-month deposit term: 6.8%/year; 12 months: 7.2%/year; 18 months: 7.5%/year. As for the interest rate for 3-month loans, it is 9%/year; 12 months: 9.5%/year; and medium and long-term loans: 10.55%/year. In general, the interest rate reduction for some terms at this bank is 0.2%/year.

Mr. Nguyen Duc Tri, Deputy Director of Saigon Commercial Joint Stock Bank shared: Despite the difficult economic conditions, all officers and employees of the branch are trying to serve customers in the best way.Although the State Bank has not yet issued an official document to adjust the specific interest rate, Saigon Commercial Joint Stock Bank Branch has proactively lowered interest rates for customers. From there, the output interest rate will decrease accordingly, creating conditions for customers and businesses to access cheap loans...

However, it is also difficult for banks to mobilize capital, because when interest rates decrease, customers will be reluctant to deposit savings in banks and look for other investment channels with higher returns. To ensure capital to meet production and business needs in the last months of the year, from now on, branches are actively seeking customers, taking care of, promoting, and serving customers in the best way to attract a stable increase in deposits.

On the business side, Mr. Nguyen Dinh Sinh, Director of Austdoor Nghe An Joint Stock Company, said: Never before have monetary policies and bank interest rates created such favorable conditions for businesses as they do now. This is a "golden opportunity" to stimulate businesses to produce and trade more products to better serve society. Low interest rates, banks are looking for businesses, creating conditions for quick capital disbursement procedures, our company is currently doing procedures to borrow capital to invest in production at the beginning of the year, with a loan interest rate of 7%/year.

Regarding the issue of reduced deposit interest rates, it will certainly lead to a reduction in lending interest rates for new loans in the coming time. Currently, the difference between deposit and lending interest rates at some banks fluctuates between 3.2 - 3.5%/year. And so, at least after 3 weeks or more than 1 month, when new loans are signed, borrowers will enjoy a further reduction in lending interest rates compared to the present.

Quynh Lan