Commercial banks in Vietnam have recently reported a strong increase in the number of consumer loans granted since interest rates are not capped at 150 per cent like the central bank’s base rate for other commercial loans.
Many lenders have sought to increase loans of this type, and this strong growth is also attributed to recovery in the economy.
While the interest rate for trading and manufacturing was capped at 10.5 per cent per year, consumer loans, such as those used for buying homes, cars, and for financing overseas study, are subjected to negotiated rates that can be higher than 10.5 per cent per year.
Truong Van Phuoc, general director of Vietnam Export Import Commercial Bank, said that the recovering economy had prompted stronger investment into the property and stock sectors, thus spurring demand for consumer credit.
Eximbank witnessed a growth in loans of 40 per cent on-year in the first six months, compared to a rise of 15 per cent for the whole of 2008. Consumer loans contributed strongly to the credit growth at the bank, said the executive.
Nguyen Hung, general director of VPBank, said that consumption loans at his bank, to date, increased by 20 per cent from late last year. Hung said that those loans were mainly for financing houses and cars.
Similarly, Dam The Thai, head of the personal customer division of An Binh Commercial Joint Stock Bank (ABBank), said that consumption loans at the bank rose by 15 per cent from late last year.
At this time, the lending rate for consumption loans with collateral ranges from 12 per cent to 15 per cent per year. Meanwhile, banks do not encourage unsecured loans, so they set lending rates for these loans at 15 per cent per year or even higher.
Central bank governor, Nguyen Van Giau, said last week that as of late May, consumer loans of the banking system totaled VND85 trillion, an increase of 11.6 per cent from late last year. (STD)
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