return icon Vietnamnet.vn

Lending interest rates about to increase

Recently, the interbank interest rates suddenly jumped, causing many people to worry whether bank lending rates will increase in the coming time while the business and production activities have been facing many difficulties due to Covid-19.

{keywords}



However, it is recorded that many banks still keep lending interest rates at the "supportive" level for people and enterprises to do business and production.

Do small banks start to lack capital?

Data from the State Bank of Vietnam (SBV) shows that in the first week of May 2021, interbank interest rates in three terms, including overnight, one week, and two weeks, increased to 1.21 percent per annum, 1.35 percent per annum, and 1.41 percent per annum, respectively, surpassing the average level since the beginning of 2021 and above the average level in 2020.

By May 26, the overnight interbank interest rate still gradually approached the mark of 1.5 percent per annum. This is also the highest level since the second half of February this year until now. The fact that banks borrow money from each other at high-interest rates shows that bank liquidity is no longer the same as before. In the context that savings interest rates are kept at the lowest level since 2017 to now, capital mobilization of the banking system in the first months of this year is much lower than credit growth.

Specifically, by April 16, credit growth increased by 3.34 percent compared to the end of last year, but capital mobilization showed signs of slower growth than credit. According to the latest data, by March 19, capital mobilization growth merely reached 0.54 percent, while at this time, credit had already risen by more than 1.5 percent.

In Ho Chi Minh City, credit growth in the first four months of this year surged by 3 percent, much higher than the growth rate of deposits, when it edged up by only 0.65 percent. Explaining this situation, Dr. Nguyen Tri Hieu, a finance-banking expert, said that capital mobilization growth was lower than credit growth, so the liquidity of the banking system was weakening, leading to a sharp increase in the interbank interest rates in April and May.

A representative of Bao Viet Securities Company (BVSC) said that the interbank interest rate unexpectedly soared from nearly zero percent per annum to 1.41 percent per annum, reflecting the situation that small lenders have started to lack capital. According to BVSC's statistics, in early May 2021, deposit interest rates at small banks, whose capital is below VND5 trillion, increased by about 0.06 percent per annum compared to the previous month for six-month and 12-month terms.

Meanwhile, those of large commercial banks were almost unchanged. Some banks only increased slightly by 0.01 percent per annum, but some banks even reduced interest rates. State-owned banks still maintain the deposit interest rate levels of the previous month because the average interest rate of this group of banks is at the lowest level in the market.

“Although the interbank interest rates climbed sharply, it was still not as high as those during the peak period near the last Lunar New Year, when the overnight interest rate was about 2.5 percent per annum, so the situation was not tense.

This is also shown by the fact that in the last week of May 2021, none of the banks need support from the SBV on the mortgage channel because there are no new transactions," the representative of BVSC said.

Harmonizing the interests of depositors and borrowers

Recently, as the savings interest rates are low, a certain amount of money from the savings channel has flowed through other investment channels, such as bonds, stocks, and real estate. To make up for that, banks have to mobilize a large amount of long-term capital through bond issuance.

Statistics show that, over the past time, VIB has mobilized VND4 trillion of three-year bonds, with interest rates ranging from 3.7 to 4 percent per annum; VietinBank has mobilized nearly VND1.6 trillion of eight-year bonds; ACB has mobilized VND2 trillion of three-year bonds, with an interest rate of 4 percent per annum; TPBank has attracted VND2.8 trillion of three-year bonds, with interest rates of 3-4.1 percent per annum; VPBank has lured more than VND5 trillion of three-year bonds with interest rates from 3.9 to 4.2 percent per annum.

The buyers of bank bonds are mostly securities companies. According to securities companies, the interest rate mobilized through bank bonds is now much cheaper than the interest rate mobilized from the people.

From the movements of commercial banks, many experts said that currently, liquidity was quite good, so interest rates would remain stable in the immediate future. They added that the banking industry must balance the interests of both depositors and borrowers in the context of inflation and exchange rate fluctuations to offer suitable lending interest rates for people and enterprises.

Although input interest rates are low, many banks still offer credit packages with good interest rates to push capital to the market. Specifically, PVCombank has just launched a loan package of VND9 trillion with a lending interest rate of 5 percent per annum upwards for both individual and corporate borrowers.

Recently, MSB also kicked off a preferential financing package only for enterprises participating in public investment projects with a policy of financing 100 percent of capital without collaterals and a loan limit of up to VND15 billion, approved in 24 hours. MSB also increased the maximum funding limit of VND200 billion based on the output contracts of enterprises. As the bank with the highest credit growth in the banking system, the leader of Vietcombank affirmed that it would maintain interest rates at a low level and improve the credit granting process to support customers to access capital.

 

SGGP

Three companies dominate consumer lending market in Vietnam

Three companies dominate consumer lending market in Vietnam

Three companies are dominating the consumer lending market in Vietnam, with FE Credit, HD Saison and Home Credit firmly on top.

MORE NEWS

VN banking prospects from now to the end of the year

Under the circular, the State Bank of Vietnam told banks to reschedule debt repayments to help customers affected by the COVID-19 pandemic until June 30 this year.

JPMorgan: 65% of AirPods production to be located in Vietnam in 2025

JPMorgan analyst expects 20 percent of iPad, 5 percent of MacBook, 20 percent of Apple Watch and 65 percent of AirPods production to be located in Vietnam in 2025.

US$2.3 billion withdrawn from stock market, investors begin to worry

Concerns are increasing in the stock market after the State Bank of Vietnam (SBV) raised regulating interest rates and withdrew VND56 trillion (over US$2.3 billion) last week.

Teacher Nguyen Ngoc Ky writing with feet passes away

This morning, 75-year-old teacher Nguyen Ngoc K, who inspired many generations of students with his determination to rise up in life, passed away at his home in Thu Duc City.

Super typhoon barrels through central Vietnam

Super Typhoon Noru, one of the four strongest storms in 20 years, made landfall in the central region of Vietnam at daybreak today, September 28, toppling trees, damaging houses and construction works, blowing away roofs and causing flooding.

Discovering craft villages in Buddhist centre in Quang Ninh

Coming to Yen Tu relic site in Quang Ninh province – Vietnam’s major Buddhist centre, tourists can also experience traditional crafts such as making hats, bamboo handicrafts, and wood carvings.

Ministry drafts mechanism to adjust average retail power price

The Ministry of Industry and Trade (MoIT) is drafting a Prime Minister's Decision on the mechanism for adjusting the average retail electricity price.

Foreign investment disbursement hits record high in nine months

Disbursement of foreign direct investment (FDI) in the first nine months of this year reached 15.4 billion USD, up 16.2 % year-on-year and marking a record high, a report from the Foreign Investment Department (FIA) has shown.

Foreign Minister Bui Thanh Son pays visit to Germany

Minister of Foreign Affairs Bui Thanh Son paid an official visit to Germany from September 26-27 at the invitation of his German counterpart Annalena Baerbock.

2,500 children suffer from cancer in Vietnam every year

The Cancer Centre under the National Paediatrics Hospital, revealed the information in the programme "Con thuyền mơ ước" (Ship of Dreams) to improve people's awareness of children's cancer on Sunday in Hanoi.

New Vietnam-Japan cooperation era: Japanese Vice Minister of Defense

“Let's make 2023 the year that marks the beginning of a new era for both Japan and Vietnam," said Japanese Vice Minister of Defense Yasuhide Nakayama in a talk with VietNamNet.

Challenges ahead for Vietnam this year

“Pressure”, “increased difficulties” and “high risks and challenges”: these are the words used by the Minister of Planning and Investment to describe how hard it will be to fulfill Vietnam’s growth goals this year.

Some industries lack orders, others cannot take more

While woodwork companies are lacking new export orders amid high inflation in the US and Europe, food-processing companies are not receiving new orders because of rising input material prices.

Wholesale and retail sectors lead in new foreign investment approvals

The wholesale and retail industries took the lead in new foreign-invested projects in the January-September period, according to the Ministry of Planning and Investment.

Vietnam cracks down on IUU fishing ahead of EC inspectors’ visit

Deputy Prime Minister Le Van Thanh has ordered strengthening inspections to ward off illegal, unreported and unregulated (IUU) fishing as European Commission (EC) inspectors are coming to Vietnam in October.
back_to_top