Many domestic firms have no need for new loans (Photo: ndh.vn)

However, with a rise of 1.3 percent in the first quarter of this year, credit had still increased by 0.8 percent by April 15.

The SBV said credit demand from firms involved in industry, construction and agriculture had increased by 1 percent and 0.3 percent, respectively, while the figures had declined for trade, services, tourism and consumption. Credit demand from small- and medium-sized enterprises (SMEs) also decreased by more than 1 percent.

According to Nguyen Quoc Hung, Director of the SBV’s Credit Department, demand had dropped off sharply and not only in Vietnam because many other countries were applying social distancing measures to stem the outbreak, which had caused a sharp decline in both local consumption and export demand.

Given the current difficulties, many domestic firms were focusing on capital recovery and debt repayments and had no need for new loans, Hung said, adding four State-owned commercial banks wanted to boost their credit portfolios but could not.

According to the SBV, commercial banks were mainly focusing on debt structuring and providing 300 trillion VND (12.9 billion USD) worth of credit at low interest rates to firms affected by the pandemic. More than ten banks had committed to lending at interest rates reduced by 0.5-2.5 percentage points. As of April 10, almost 126 trillion VND (5.4 billion USD), or 42 percent of the amount, had been lent to 6,500 borrowers.

The Military Bank (MB) has launched two credit packages worth 45 trillion VND for large firms. The first package worth 17 trillion VND with interest rates cut by 0.5-1 percentage points applied until September 30 this year is for customers with outstanding loans hit by COVID-19. The second package valued at 28 trillion VND with interest rates of 4.8-6 percent per year is set aside for new loans to stimulate firms.

The MB has already introduced a 30 trillion VND package and another 20 trillion VND package with preferential interest rates for individual customers and SMEs.

The Nam A Commercial Joint Stock Bank (NamABank) has also launched a credit package worth VNĐ15 trillion with an interest rate reduction of 2 percent for individual and corporate customers in agriculture, accommodation, restaurants and import-export.

The Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank) has also announced a 10 trillion VND credit package with an interest rate cut of 2 percentage points for all borrowers until September 30 this year./.