Banks quizzed over interest rates

Lending rates have struggled to gain momentum despite lower interest rates significantly beneficial to commercial banks.

Illustrative image. (Photo: SGGP)
Illustrative image. (Photo: SGGP)

The issue stirred debate at a forum to review the State Bank of Vietnam (SBV)'s policies for the 2011-13 period, held in Hanoi on October 30.

Nguyen Xuan Thanh, director of the Fulbright Economics Teaching Programme in Ho Chi Minh City, said their survey of commercial banks showed that the yearly lending rate was between 12-13 percent.

ANZ figures revealed that 20 percent of loans were at interest rates higher than 13 percent.

Thanh said that despite the annual deposit rate being 7.5 percent and lending rates between 12-13 percent, the 6-7 percent difference was considered to be excessive compared with the normal 3-4 percent.

However, Le Xuan Nghia, director of the Business Development Institute, said the difference was not high.

A recent survey from the National Financial Supervision Commission (NFSC) at eight big banks showed that the difference between the mobilising and lending rates was 4.3-4.5 percent a year, and the highest level of 5 percent in some banks.

The disparity suggested the lending rate sharply reduced while the mobilising rate had not lowered, Nghia said.

Truong Van Phuoc, NFSC's vice chairman, said figures from some banks showed the difference was only 2.8 percent a year.

Phuoc said the difference could not be calculated by deducting the lending rate from the mobilising rate and needed to factor in administrative and management costs.

"The difference would be between 1.3-1.8 percent a year or even 1 percent if we took into account the above mentioned costs," he said.

SBV Deputy Governor Dao Minh Tu said the central bank had to complete its own assessments on the issue.

Our calculations showed that the difference at commercial banks was much lower than the figures released by experts, Tu said.

Pham Xuan Hoe, deputy head of the SBV's Monetary Policies Department, agreed, saying that the difference in the whole banking system was 3 percent, not 5-6 percent.

Hoe added that if the difference was high, banks' profits announced on the stock market would be surely huge.

Statistics from the central bank showed the mobilising rate of credit institutions which offered no-terms or terms less than 1 month were 1-1.2 percent while those more than 12 month were 7.5-9 percent a year. However, the policies have been produced encouraging results and helped stabilise the economy.

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