Lending rates cut by up to 3%, to lower borrowing costs for businesses and priority sectors

Lending rates cut by up to 3%, to lower borrowing costs for businesses and priority sectors

Nearly 20 banks in Việt Nam have lowered deposit interest rates generally by 0.5 per cent points per year while 14 lenders have announced cuts to lending rates of mostly 1.5-2 percentage points with reductions reaching as much as 3 per cent points in some cases.

Transactions at a branches of Agribank in Hưng Yên Province. Banks have moved to cut rates to lower borrowing costs in response to the Government's requests. — VNA/VNS Photo Mạnh Khánh

The moves respond to the requests by the Government and the State Bank of Vietnam (SBV) to lower borrowing costs for businesses and priority sectors.

VPBank has cut lending rates by 1.5 per cent points per year for individual customers operating in six key sectors, including pharmaceuticals, consumer retail and food services, construction materials, tourism, agriculture and aquaculture, and handicraft production and trading.

For small- and medium-sized enterprises (SMEs), VPBank has allocated VNĐ10 trillion (US$380 million) to working capital loans with interest rate reductions of up to 1.5 percentage points per year for priority sectors including supporting industries, manufacturing, high technology, the digital economy, artificial intelligence, semiconductors and the green economy.

HDBank has launched a VNĐ10 trillion credit package for SMEs, with rates 1.5 percentage points below its existing preferential lending rates.

TPBank has pledged to reduce lending rates by 1.5-2 percentage points while SHB has introduced a credit package for production and business with rates starting at 5 per cent per year and reductions of 1.5-2 percentage points.

Other banks which have cut lending rates include Sacombank with a VNĐ40 trillion corporate lending package, MSB with VNĐ10 trillion package, MB with reductions of up to 2 percentage points for priority sectors and OCB with reductions of up to 2.25 percentage points for OCB Priority Banking members.

The country's four major lenders, Agribank, VietinBank, BIDV and Vietcombank, have also introduced measures to lower lending rates by up to 2 percentage points per year.

Vietcombank is offering cuts of as much as 3 percentage points for short-term loans in certain sectors.

On the deposit side, Sacombank, MSB has reduced rates by 0.5 percentage points per year for maturities of six months or longer. VPBank has applied a similar reduction to individual customers holding online savings deposits with maturities of 15 and 18 months.

Other lenders that have reported deposit rate reductions include Vietcombank, Agribank, TPBank, ACB, OCB, Nam A Bank, LPBank, BVBank, VietBank, SeABank, PGBank, Bac A Bank, BaoVietBank, NCB and KienlongBank.

At a meeting with 46 commercial banks on the morning of October 19, the SBV’s Governor Phạm Đức Ấn urged lenders to lower interest rates while safeguarding financial system stability.

The SBV said that the gap between outstanding loans and deposits remained substantial, although it had narrowed from nearly VNĐ2 quadrillion to less than VNĐ1.5 quadrillion.

Prime Minister Lê Minh Hưng also pledged decisive and effective measures to reduce lending rates at the opening of the second session of the 16th National Assembly on October 17.

Conclusion No. 106-KL/TW, issued on October 15 following the fourth plenum of the 14th Party Central Committee, urges lower lending rates, greater credit flows to production, business and priority sectors, and tighter controls on lending to areas carrying potential risks. 

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