Some smaller banks have followed the lead of the big state-run and private banks and reduced lending interest rates by 0.5-1 percentage points for existing loans.
Le Thanh, who had borrowed from a small bank to buy a house in Ho Chi Minh City, said she was notified by the bank earlier this month that the interest rate would be lowered to 13.95% from the previous 14.9% per year.
People who had secured personal loans also said their banks have cut the interest rate by 0.5-1 percentage point.
A credit department employee at a commercial bank said the biggest cuts are applicable to loans borrowed more than one year ago or a couple of months ago because banks’ cost of capital had been low in the two periods.
Leading private lender Techcombank announced a 0.6-percentage-point reduction in interest rates on all personal and corporate loans from May 31. OCB reduced its rates by 0.5%age points for all loans starting in June.
But deposit and lending interest rates are unlikely to fall any further, a banker said, explaining that lenders
have to prepare for negative scenarios, especially a rise in bad debts.
According to SSI Securities Corporation, the average lending interest rate is currently around 12.5%, down 2.2 percentage points from the end of last year, but still 2 points higher than in 2019.
By May credit had grown by only 3.17% for the year.
SSI said there are three main reasons for the low absorption of capital, namely manufacturers suffering from weaker sales, resulting in lower demand for loans; small- and medium-sized enterprises’ weakened financial health and resultant failure to meet loan conditions; and property developers having lower demand for credit due to stalled projects.