Wide deposit-loan interest gap persists: analysts

Wide deposit-loan interest gap persists: analysts

The interest rate gap between loans and deposits has reached 4 per cent, benefiting banks but causing difficulties for enterprises, independent analysts have said.

In recent months, banks have cut deposit interest rates, with the rate on short-term deposits at some banks standing at 4.5 to 5 per cent per year and for long-term deposits, 7 per cent per year.

Although lending interest rates have been cut, they remain high, averaging between 8 and 12 per cent per year.

Do Minh Toan, general director of the Asia Commercial Bank, said that his bank's current average lending interest rate was 9.7 per cent per year.

Interest rates of between 7 and 8 per cent were offered only to financially healthy enterprises with highly feasible projects.

At Eximbank, its average lending interest rate has been about 9.5 per cent, and its lowest loan interest rate, 7-7.7 per cent per year.

Tran Phuc Vu, general director of Nam A Bank, said that his bank's preferential lending interest rate was between 8 and 9 per cent per year for short-term loans and 11 per cent per year for long-term loans.

The chairman of an enterprise in HCM City's Hoc Mon District said his company was paying an interest rate of between 11 per cent and 11.5 per cent for bank loans.

Agribank's lending interest rate of 11 per cent per year for a loan to the Special Aquatic Products Joint Stock Company (Seapimex) caused problems for the company, the deputy director of Seaspimex Do Trong Vinh said.

The current interest rate gap between deposits and loans should be reduced to about 2.5 per cent to keep the lending interest rate between 6 and 7 per cent in order to support enterprises, he said.

Many banks have recently launched several preferential credit packages with very low interest rates but it has not been easy to access such soft loans.

Pham Ngoc Hung, vice chairman of the HCM City Enterprises Association, said that many banks had offered a lending interest rate of only 7 and 8 per cent per year, but only a few enterprises could qualify for them.

Most enterprises had to pay the lowest lending interest rate of 10 per cent per year for short-term bank loans and higher interest rates for medium- and long-term loans, Hung said.

Cao Si Kiem, former governor of the State Bank of Viet Nam, told Dau Tu (Vietnam Investment Review) newspaper that it was necessary to cut the interest rates because inflation was dropping and the country's lending interest rate was two times higher than those of countries in the region.

Also, domestic enterprises do not have many opportunities to make profits as the economy is still sluggish, he added.

"In addition, lowering the interest rates at a level that enterprises can bear would encourage credit activities," Kiem added.

Analysts, however, said that banks did not want to lower lending interest rates since they wanted to make more profits to settle their bad debts.

A member of the National Monetary and Financial Advisory Council, who declined to be named, told Dau Tu that most banks were trying to survive and were not financially strong enough to rescue enterprises as well.

Many banks not only face huge bad debts but have a low level of chartered capital.

Thus, narrowing the gap between deposit and loan interest rates is not feasible at this time, the council member said. 

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