Renewed Rate Cut on Existing Loans

The Governor of the State Bank of Vietnam (SBV) required credit institutions to review and lower interest rates for existing loans to the cap of 15 percent per annum on the basis of their financial capacity in mid-July. As of August 2, commercial banks issued guidelines to their branches all over the country to announce interest rate cuts for existing loans to 15 percent per annum. According to the SBV’s preliminary data, as of July 27, the proportion of loans with interest rates above 15 percent at 35 credit institutions accounting for 70 percent of the whole credit market share is 32.8 percent, down by as much as a half before July 15 (65.3 percent).

 

As of August 2, 69 credit institutions (including 5 State-owned commercial banks, 27 joint stock commercial banks, 25 branches of foreign banks, and 12 finance and leasing companies) accounting for 90 percent of the whole credit market share submitted their reports on outstanding loan in Vietnamese dong. Accordingly, loans bearing interest rates of below 10 percent per annum accounted for 3.4 percent, loans subjected to interest rates of 10 - 13 percent made up 18.5 percent; loans with rates of 13 - 15 percent occupied 49.1 percent; and loans imposed rates of above 15 percent were 29.1 percent (down by 60 percent compared with July 15 backwards). In particular, interest rates offered by 5 State-owned banks declined most remarkably (loan proportion with interest rate of above 15 percent was 6.9 percent, down 87 percent as compared to that before July 15 (61 percent).