SBV Deputy Governor Đào Minh Tú visits an aquaculture household in Quảng Yên Town in Quảng Ninh Province, which was heavily affected by Typhoon Yagi. — Photo courtesy of SBV

HÀ NỘI — Commercial banks are responsible for sharing the burden of those who were severely affected by Typhoon Yagi, officials from the State Bank of Vietnam (SBV) have said – including by restructuring debts or lowering interest rates for storm-stricken customers.

Initial statistics show that nearly 12,000 customers with total estimated outstanding loans of more than VNĐ26 trillion in Quảng Ninh Province and Hải Phòng City were severely affected by the typhoon.

At a Thursday meeting about financial damage to banks and customers in Quảng Ninh Province and Hải Phòng City, Deputy Governor of the State Bank of Vietnam (SBV) Đào Minh Tú directed banks in affected areas to implement plans to support those affected. Potential plans include restructuring debt payment terms, maintaining debt groups unchanged and considering exempting or reducing interest rates for affected customers.

Aside from debt and risk settlement plans for customers who have suffered heavy losses and are unable to pay, banks will also be required to continue providing new loans to customers to restore production and business after the storm.

Bank representatives said that they are quickly implementing solutions to support customers facing difficulties after the typhoon.

VPBank on Friday announced that it would reduce interest rates by 1 percentage point for medium- and long-term loans and by 0.5 percentage points for short-term loans from September 13 to December 31 for customers in all provinces and cities directly affected by Typhoon Yagi.

Lê Duy Hải, deputy general director of VietinBank, said the bank will quickly assess the overall damage to customers to get a better idea of appropriate support measures.

Lê Trung Thành, deputy general director of BIDV, said that the bank continues to update information from branches in affected provinces and cities to assess the level of damage to customers, and that it plans to restructure debts and reduce interest rates. The bank considers this an urgent task that needs to be prioritised.

Further rate cuts

Domestic lending interest rates may further decrease, but not much after the US Federal Reserve (Fed)’s expected interest rate cut this month, experts forecast.

Economic commentators so far believe that the possibility of the Fed cutting interest rates this month is more than 90 per cent.

Investment Director of Vietcombank Fund Management Company Limited (VCBF) Dương Kim Anh said there will be no direct correlation between the Fed's benchmark interest rate and deposits in Việt Nam, or even the yield on Vietnamese government bonds, but there will be an indirect impact through the domestic foreign exchange rate.

According to Anh, domestic market developments over the past month show that the Vietnamese đồng has been gradually increasing in value and the depreciation of the đồng has so far decreased significantly compared to the level in May this year, when the đồng depreciated by nearly 5 per cent.

When the pressure on the đồng is reduced, the pressure on interest rates will no longer exist. Under this context, the SBV adjusted the open market operation (OMO) interest rate in the domestic market.

Anh also believes that Việt Nam's economic indicators for the first eight months of this year were positive, but based on the low growth of 2023, consumer demand was not really ‘healthy’ and inflation was nearly 4 per cent.

Việt Nam therefore still needs to maintain low interest rates to support businesses and promote consumption to achieve growth rate of up to 6.5 per cent this year and retain the growth momentum in 2025.

The Fed's interest rate cut will have a positive short-term impact on the Vietnamese exchange rate policy as it can help the SBV maintain low interest rates to support the economy. In the long term, it can affect Việt Nam's exports, Anh said.

Meanwhile, Investment Consulting Director of Maybank Investment Bank Phan Dũng Khánh said that the Fed's interest rate cut is related to the US dollar index (DXY). In the first half of this year, the Fed was expected to lower interest rates, but the DXY tended to increase and only decreased again since the beginning of the third quarter, when the possibility of the Fed's interest rate reduction reached more than 90 per cent.

The domestic exchange rate on the free market has occasionally increased to VNĐ26,000 per dollar, but is now returning to VNĐ25,000 per dollar. However, the exchange rate of the đồng against the dollar is relatively stable.

Businesses often complain about high interest rates, but only a few of them complain about the exchange rate. There were times when the đồng depreciated against the dollar, but compared to the euro or Japanese yen, the depreciation of the đồng was very low. The đồng is currently in a good position thanks to the dollar's downward trend, Khánh said.

At the same time, Khánh added that it is difficult for the dollar to decrease further, as the DXY is currently at 100. Thus, pressure on the domestic exchange rate will be reduced.

Regarding domestic interest rates, Khánh said it is incorrect to think that the Fed's interest rate cut means a period of cheap money is on the horizon. In fact, the Fed's interest rate is at 5-5.5 per cent, which is still at a very high level and far from neutral. It is therefore possible for banks to further reduce interest rates, but not much.

Sharing the same view, Hồ Hữu Tuấn Hiếu, an investment strategy expert at Saigon Securities Incorporation, said the savings interest rate has increased since the beginning of this year due to the warming up of credit growth, but it is not a problem for liquidity in the banking system. This is an expectation, not a concern.

The Fed's interest rate cut will create room for domestic monetary policy-makers to stabilise domestic interest rates, which helps recover the economy and other assets, Hiếu noted. — VNS