Vietnam - Big banks take lead in lowering lending rates

Following BIDV, VietinBank and Vietcombank, now it is Agribank’s turn to lower lending interest rates.

The positive actions of these "big four" banks are expected to make the loan interest rate platform down.

On Feb 22, Bank for Agriculture and Rural Development of Vietnam (Agribank) officially reduced interest rates for all loans, the decrease rate from 1% to 1.5%, ranged between 15.5% - 20% depending on loan purposes. Agribank's loan interest chart showed that this bank is oriented to short and medium term loans to service production and processing of agriculture, forestry and fishery.

Before Agribank, BIDV, Vietcombank and VietinBank also announced lowering interest rates for dong loans. Besides, Asia Commercial Bank (ACB) has implemented incentive programs for export loans with interest rates down by 0.5% lower than its normal rates. ACB has prepared a capital of $100 million to implement this program.

According to Nguyen Ngoc Bao - Agribank Chairman, the four big banks including Agribank, Vietinbank, BIDV and Vietcombank currently accounts for 55-60% credit market share. "The four banks along with commercial banks that have good quality are located in Group 1 of banks, I believe that the interest rate platform will be reduced in a short time,” Bao said.

According to Bao, he has placed his faith in the reduction of interest rates in the near future. And before interest rates fall, banks will implement several measures to cut costs, and accepting lower profits in part to lower interest rates. With Agribank, the bank will focus the recovery on bad debts, real estate debts, and consumer debts to switch to agricultural and rural lending. In particular, for real estate, the bank will be work with clients to restructure projects, even sell or exchange ineffective projects for debt recovery.

Mr Tai Hui, head of Southeast Asia research, under the Global Research team of Standard Chartered Bank, said that Standard Chartered expects inflation will continue to decline from February 2012, after the Tet holidays and will return to 1-digit number at the end of Q2/2012. This will depend very much on the stability of world commodity prices and the stability of the dong. Ability to rising electricity prices may increase the risk of high inflation back in 2012. The inflation slowdown may facilitate the State Bank of Vietnam (SBV) to lower interest rates, although the central bank has pledged to continue tightening monetary policy at least until the end of Q1/2012 ".

VietBiz24

Business & Investment Opportunities

YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Consulting, Investment and Management, focusing three main economic sectors: International PR; Healthcare & Wellness;and Tourism & Hospitality. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programs. Sign up with twitter to get news updates with @SaigonBusinessC. Thanks.