Positive effects from a credit policy

(Baonghean)Following the directive from the Governor of the State Bank of Vietnam to reduce interest rates on existing loans to a maximum of 15% per year for two weeks, major commercial banks in the province such as Vietcombank, Industrial and Commercial Bank, Investment Bank, and Agricultural Bank of Vietnam have quickly lowered interest rates for their customers.

When we approached Mr. Phan Viet Phong, Deputy Director of Vietcombank Trung Do branch, to inquire about this matter, he confirmed that all existing loan contracts at Vietcombank Trung Do branch have been adjusted to a maximum interest rate of 15% per year since July 13, 2012. 59 businesses with outstanding loans of 180 billion VND and 108 individual customers with outstanding loans of 30 billion VND have all had their interest rates adjusted down to 15% per year. The branch's old debt accounted for approximately 30%, all of which had been adjusted to an interest rate of 15%. The remaining 60% of customers who borrowed later benefited from interest rates lower than 15% since June 1, 2012. Before implementing the State Bank Governor's directive on a maximum lending interest rate of 15% per year for old loans, on June 1, 2012, Vietcombank Trung Do Branch lent to small and medium-sized enterprises (SMEs) at an interest rate of 13.5% per year. By June 11, the rate was 14% per year for regular loans and 12.5% ​​per year for SMEs. Subsequently, on July 13, the interest rate for regular loans was 13% per year, and for SMEs it was 11.5% per year. Given that 90% of the bank's revenue comes from lending, reducing interest rates will significantly impact profits, but this is also an opportunity for Vietcombank to demonstrate its responsibility and share the burden. Profits that benefit the community and society, specifically businesses.



Lowering interest rates on existing loans – a practical support for businesses.

Ms. Le Thi Ly, Head of Risk Management Department at the Investment and Development Bank of Nghe An, stated: "With the tradition of a large commercial bank always being at the forefront of lowering interest rates for customers, we are urgently implementing credit solutions to support and alleviate difficulties for businesses and individuals borrowing capital from the bank. We have adjusted interest rates for all short, medium, and long-term loans to 15% per year for 100% of businesses and households. However, interest rates for consumer loans, securities, and real estate loans have not been reduced. For 317 businesses and individuals with outstanding loans totaling VND 1,334 billion, the interest rate has been adjusted down to 15% per year. Old loan contracts with interest rates ranging from 16% to 18% per year have now been adjusted down to 15% per year, meaning the Investment and Development Bank of Nghe An branch will save more than VND 2.4 billion in interest per month."

Mr. Le Thanh Phong, Deputy Director of the Ben Thuy branch of the Vietnam Industrial and Commercial Bank, also confirmed: All corporate customers, business households, and even consumer loan customers with old contracts have had their interest rates reduced to 15% per year. Upon receiving the directive from the Vietnam Industrial and Commercial Bank, the Ben Thuy branch immediately instructed the Customer Service Department and Transaction Department to automatically adjust and lower interest rates for all customers on July 15, 2012. Some customers may not have known about the interest rate reduction because their interest payment due date hasn't arrived yet, but they will see the reduction applied to their loan interest payments the following month. Currently, the outstanding loan balance of the Ben Thuy branch of the Vietnam Industrial and Commercial Bank is nearly 1,500 billion VND, with lending interest rates ranging from 12.5% ​​to 15% per year. Approximately 60% to 70% of the old contracts with interest rates above 15% per year have now been adjusted to below 15% and 15% per year. For customer groups in priority sectors including agriculture, rural areas, exports, small and medium-sized enterprises, and supporting industries, loans are offered at interest rates of 12-13% per year. Many businesses have benefited from these low-interest loans, such as Hoang Thi Loan Textile and Garment Company, Trung Do Joint Stock Company, Northern Industrial and Construction Trading Joint Stock Company, and Central Construction Materials Joint Stock Company…

Ms. Vo Thi Hung, Head of Accounting Department at Hanoi Housing Investment and Development Joint Stock Company No. 30, stated: “Our company regularly borrows between 15 and 17 billion VND from the Nghe An Investment and Development Bank. Previously, the interest rate was 17%–19% per year, with monthly interest payments alone amounting to approximately 250 million VND. Now, the bank has adjusted the interest rate down to 15% per year, saving us over 40 million VND in monthly interest payments. In the current sluggish real estate market, where sales are difficult and construction businesses like ours are facing significant challenges, reducing interest costs is a practical solution to save our business.”

Ms. Nguyen Thi Bich Thu, Chief Accountant of Toyota Vinh Joint Stock Company, said: “Our business typically requires a large amount of capital in a short period to purchase vehicles for temporary storage to meet customer demand. On average, we borrow about 20 billion VND per month from Vietcombank Trung Do. At the beginning of 2012, if we borrowed 20 billion VND at an interest rate of 18% per year, the interest payment would be 300 million VND per month.” Currently, the bank has offered us a preferential adjustment, reducing the loan interest rate to 10% per year, so the interest payment is only 160 million VND per month, saving us 140 million VND in interest per month.

Mr. Nguyen Huy Hoang, residing in Block 6, Nghi Tan Ward, Cua Lo Town, shared: "My family specializes in processing frozen seafood, both for domestic consumption and export to China. To invest in storage facilities and product procurement, in addition to our own capital, I have to borrow nearly 2 billion VND per month from the Nghe An Investment and Development Bank. At the beginning of 2012, the loan interest rate was 16% - 17% per year, but now it has been adjusted down to a lower rate. My family is very pleased because we have reduced input costs, lowering product prices and making them more competitive in the market."

Thus, the bank has made efforts to support its customers; the remaining issue is how businesses will develop effective production and business plans!

Quynh Lan