Commercial banks have agreed to lower deposit interest rates by about 0.5 percent starting from March 6, while State-owned banks will only reduce their rates by 0.2 percent because they are already at the lowest level in the market.
Vietnam's lending interest rates are higher than many countries in the world, while last year, Vietnam was one of the countries with the lowest inflation level. This paradox needs to be explained to find solutions to ease the burden on businesses.
The group of the four biggest State-owned banks (Big 4) have launched preferential loan packages with interest rate reductions of up to 3% per year to lower short-term lending rates to only 7% per year.
The recent sharp increase in deposit interest rates has pulled lending interest rates up by 3-4 percent per annum over the same period last year. In the face of highly increasing pressure on the USD/VND exchange rate, deposit interest rates have not cooled down yet, so the pressure on lending interest rates in the peak months of the year is still huge.
While many businesses have a high demand for capital at the end of the year for business loans, workers’ salary payments, and bonuses, banks are not allowed to extend more credit to their customers; therefore, businesses have to struggle to find capital.
Assessing that difficulties and advantages will be inextricably intertwined in 2023 but the difficulties will far overweigh the advantages. The Ministry of Planning and Investment decided on a growth scenario in 2023 of about 6.5 percent at the Government press conference on the afternoon of October 1.
Amid the context that central banks of many countries raised interest rates sharply, from September 23, the State Bank of Vietnam (SBV) decided to increase operating interest rates, which experts assessed as a timely action.
The banking industry has been facing many difficulties due to concerns about inflation and increasing bad debts since Circular No.14 ended, especially the Government's actions to closely manage and supervise the capital and real estate markets. Will this sentiment bring banking stocks to attractive levels in both the short and long term?
The discussion for granting credit limits to commercial banks heated up at the third session of the fifteenth National Assembly when delegate Mr. Trinh Xuan An from Dong Nai asked the Governor of the State Bank of Vietnam to explain the rationality behind the credit room allocation mechanism, and whether it interfered with bank operations.
Vietnam has controlled inflation at 2.25% in the first five months of the year, but inflationary pressure in coming time is very large. Therefore, monetary policy management, including credit room control, needs to remain cautious.