Friday, August 18 2017

VietNamNews

Lending rate cut to reduce bank’s interest income

Update: July, 12/2017 - 14:31
Total outstanding loans of commercial banks in HCM City reached VNĐ1.59 quadrillion in the first five months of the year, of which short-term lending accounted for 45.2 per cent. — Photo soha.vn
Viet Nam News

HÀ NỘI — With a cut of 0.5 percentage points in short-term interest rates applied for đồng loans in the prioritised sectors, commercial banks in HCM City would lose VNĐ734 billion (US$32.6 million) in net interest income, according to a central bank official.

Nguyễn Hoàng Minh, deputy director of the State Bank of Việt Nam (SBV)’s HCM City branch, said loans supplied to five prioritised sectors -- agricultural production, export business, production of small and medium-sized enterprises (SMEs), auxiliary industry and high-tech production -- in HCM City in the first five months of the year amounted to VNĐ600 trillion ($26.6 billion).

Short-term loans in the five sectors made up 24.5 per cent to reach VNĐ146.8 trillion in the period.

Earlier, the SBV announced that the ceiling interest rate for short-term loans in đồng would be cut by 0.5 percentage points from 7 per cent per year to 6.5 per cent.

The new rate which came into effect on July 10 is only applicable for firms operating in the five sectors.

Following the central bank’s decision, several commercial banks have lowered their short-term lending rates. Due to the rate cuts, the banks’ interest income is expected to decline in the coming months.

Minh said banks currently are finding ways to save operation costs to offset the decline in the interest income because deposit interest rates are still kept unchanged.

Total outstanding loans of commercial banks in HCM City reached VNĐ1.59 quadrillion in the first five months of the year, of which short-term lending accounted for 45.2 per cent, according to a report of the HCM City’s People’s Committee. — VNS

 

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