Banks quizzed over interest rates

Banks quizzed over interest rates

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

The issue stirred debate at a forum to review the State Bank of Viet Nam (SBV)'s policies for the 2011-13 period, held in Ha Noi yesterday.

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

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

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

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 per cent a year, and the highest level of 5 per cent 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 per cent 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 per cent a year or even 1 per cent 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 per cent, not 5-6 per cent.

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 per cent while those more than 12 month were 7.5-9 per cent a year. However, the policies have been produced encouraging results and helped stabilise the economy.

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