HA NOI — Commercial banks have begun to cut lending interest rates amid signs of improvement in the economy.
Agribank on Tuesday announced a cut of 1-1.5 per cent in lending rates offered to borrowers across-the-board, establishing rates of between 15.5 per cent and 20 per cent per year.
This followed moves by the Bank for Investment and Development of Viet Nam (BIDV), Vietinbank and Vietcombank, which have all reduced interest rates this month on loans in dong, with commercial lending rates now ranging from 14.5 per cent to 17 per cent per year.
Asia Commercial Bank has also launched a preferential lending programme to exporters with interest rates lowered by 0.5 per cent from normal levels.
"I believe the general level of lending rates will gradually decline in the short term," said Agribank chairman Nguyen Ngoc Bao, noting that the four banks to have already lowered rates represented a combined 55-60 per cent share of the domestic credit market.
He added that the banks were all ranked in "Group 1" – which industry insiders use to refer to the healthiest, safest and most stable credit institutions.
Tai Hui, a researcher at Standard Chartered Bank, told the online newspaper Vietnamplus that inflationary pressures had begun to ease and inflation could fall to one-digit levels by the end of the second quarter. He said much would depend much on the stability of global fuel prices and domestic electricity costs, as well as the strength of the dong.
Economic improvement could create conditions for the State Bank of Viet Nam to loosen monetary policies, he said, predicting that the bank would lower the refinancing rate from 15 per cent to 12 per cent at the end of the second quarter, and to 11 per cent in the third quarter.
Bao said he also expected deposit interest rates to fall in the coming months, noting that banks needed to cut costs and absorb losses before lending rates could fall.
Agribank would concentrate on recovering bad debts among property and consumer borrowers and retrain its focus on lending to agricultural and rural borrowers. — VNS