Since early July of 2010, many banks have announced interest rate policy applied for loans in dong only from 12.5 percent - 13.5 percent per year, driven by the government's directive and the State Bank.
However, this is a major incentive for the three targeted groups including companies operating in the export sector, small and medium enterprises, enterprises in the agricultural sector and rural areas.
In fact, the average interest rate for most individual and corporate borrowers is still ranging from 14 percent to 16 percent per year.
According to the latest weekly update from the State Bank, the dong interest rates of state-run commercial banks are averaging at 13 percent - 14.5 percent per annum, while commercial joint stock banks offer the rate of 13 percent - 14.5 percent per year.
Through the unified agreement among bank members of Vietnam Banking Association (VNBA), as of October 15, the deposit interest rates in dong will be reduced to 11 percent per year, rather 11.2 percent for the more popular term at present. This step is a very small adjustment; it is difficult to make a push for stronger banks to lower corresponding lending rates.
But, from early October, some bank members have lowered interest rates locally. This motion can take part in the agreement as taking effects, but the main reason is still from the internal requirements and demand of commercial banks.
Also, a deputy general manager of a commercial bank in HCM City said that over the first 9 months, his bank has completed 90 percent of credit growth plan for the whole 2010. In three remaining months, his bank is expected to be disbursed about another 6 trillion dong to complete its 2010 lending plan.
But the problem is not necessarily only to reach its credit disbursement target and business plan. In fact, this bank has made a strong step to raise its chartered capital to satisfy the State Bank's capital rule and the minimum capital adequacy ratio (CAR) 9 percent of Circular 13 (effective from October 1).
With strong capital levels increased rapidly and in such a short time, the concern of "obesity" (too excessive expansion) is a question for this bank. This is a pressure to force the bank to find a reasonable output for this new energy source as it far exceeds the safety regulations, of which promoting the disbursement is an important choice for itself.
That bank is not a unique case, because in the last months of 2010, the market received the frantic series of bank capital increases to meet the statutory capital requirements of the State Bank. Output of new capital accrued such a problem is not simple. In a demonstration of the capital increase, it is easy to see the phrase "technology investments", "infrastructure investment", "branch expansion," strengthen the financial capacity "and also marks the third dots (...) to leave open.
"How can you just do thousands billions of investment for those items! What to be left open is important to lend and boost credit. And this is a convenient source of capital," a bank leader said.
The favourable factor here in association with Circular 19 of the State Bank, amending Circular 13. A noticeable change is the own capital or equity of banks is not tightened by 80 percent of lending limit in Circular 13 as this circular was amended in replacement of Circular 19.
A leader of a commercial bank commented that it was a very favourable factor when trillions of dong are not included within that limit. When answering reporters' questions on this point, the State Bank also emphasized that "commercial banks may use up to 50 percent of chartered capital to purchase and build facilities for business activities and also the remainder of 50 percent to operate credits because it is their own capital."
Of course, the relationship between the advantages of capital and the pressure to use its lending rates on the market depends on many different factors. And according to bankers and economists, the lending rates are forecasted not to reduce quickly, but need a roadmap.
However, this is a major incentive for the three targeted groups including companies operating in the export sector, small and medium enterprises, enterprises in the agricultural sector and rural areas.
In fact, the average interest rate for most individual and corporate borrowers is still ranging from 14 percent to 16 percent per year.
According to the latest weekly update from the State Bank, the dong interest rates of state-run commercial banks are averaging at 13 percent - 14.5 percent per annum, while commercial joint stock banks offer the rate of 13 percent - 14.5 percent per year.
Through the unified agreement among bank members of Vietnam Banking Association (VNBA), as of October 15, the deposit interest rates in dong will be reduced to 11 percent per year, rather 11.2 percent for the more popular term at present. This step is a very small adjustment; it is difficult to make a push for stronger banks to lower corresponding lending rates.
But, from early October, some bank members have lowered interest rates locally. This motion can take part in the agreement as taking effects, but the main reason is still from the internal requirements and demand of commercial banks.
Also, a deputy general manager of a commercial bank in HCM City said that over the first 9 months, his bank has completed 90 percent of credit growth plan for the whole 2010. In three remaining months, his bank is expected to be disbursed about another 6 trillion dong to complete its 2010 lending plan.
But the problem is not necessarily only to reach its credit disbursement target and business plan. In fact, this bank has made a strong step to raise its chartered capital to satisfy the State Bank's capital rule and the minimum capital adequacy ratio (CAR) 9 percent of Circular 13 (effective from October 1).
With strong capital levels increased rapidly and in such a short time, the concern of "obesity" (too excessive expansion) is a question for this bank. This is a pressure to force the bank to find a reasonable output for this new energy source as it far exceeds the safety regulations, of which promoting the disbursement is an important choice for itself.
That bank is not a unique case, because in the last months of 2010, the market received the frantic series of bank capital increases to meet the statutory capital requirements of the State Bank. Output of new capital accrued such a problem is not simple. In a demonstration of the capital increase, it is easy to see the phrase "technology investments", "infrastructure investment", "branch expansion," strengthen the financial capacity "and also marks the third dots (...) to leave open.
"How can you just do thousands billions of investment for those items! What to be left open is important to lend and boost credit. And this is a convenient source of capital," a bank leader said.
The favourable factor here in association with Circular 19 of the State Bank, amending Circular 13. A noticeable change is the own capital or equity of banks is not tightened by 80 percent of lending limit in Circular 13 as this circular was amended in replacement of Circular 19.
A leader of a commercial bank commented that it was a very favourable factor when trillions of dong are not included within that limit. When answering reporters' questions on this point, the State Bank also emphasized that "commercial banks may use up to 50 percent of chartered capital to purchase and build facilities for business activities and also the remainder of 50 percent to operate credits because it is their own capital."
Of course, the relationship between the advantages of capital and the pressure to use its lending rates on the market depends on many different factors. And according to bankers and economists, the lending rates are forecasted not to reduce quickly, but need a roadmap.
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