BIDV cuts lending rate to 14.5%
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The Bank for Investment and Development of Vietnam (BIDV) has announced to cut lending rate for specific groups of borrowers upon a meeting between the central bank and Vietnamese commercial banks on banking targets for the coming year.
The state-owned commercial bank has set the new lending rate at 14.5-15.5 percent, the fifth rate cut in the last 4 months and the 2nd within a month.
The newly revised lending rate is targeting exporters, agro producers, small and medium enterprises, and those affected by natural calamities.
The group of borrowers currently account for 40 percent of BIDV’s total outstanding loan of VND270 trillion.
It is an unusual move given the fact that all other lenders are maintaining the rate at 17-18 percent for the targeted groups, according to newswire Vneconomy.
With a 2.5 percent difference in its lending rate, the newswire questions how BIDV makes a profit with only 0.5-1.5 percent to cover all the operational costs.
Pham Quang Tung, deputy general director of BIDV, told the newswire that the bank was in a state of surplus capital, including non-term deposits at low costs and depositing rates.
The move is also aimed at supporting businesses by boosting liquidity in the peak season, which, in return, will help BIDV find new customers and expand its market share, he added.
BIDV’s decision is thought to pave the way for new rate cuts.
With a future credit growth of 15-17 percent, a decade low, and M2 growth of 14-16 percent for 2012, the central bank is still very consistent in containing inflation following the advice of international institutions including the World Bank and the International Monetary Fund.
The new target in credit and M2 growth has also taken into account the capacity to absorb the capital of Vietnamese economy. With 2011’s credit growth of 15 percent, the growth in gross domestic product this year has fulfilled the government’s target of 6-6.5 percent.
As a result, the meeting is expected to tackle the glut in capital flow for the coming year since the same 20-percent credit growth rate set for all banks this year have caused a stagnancy in capitals for the whole economy and affecting banks with surplus idle money.
|The State Bank of Vietnam – Vietnam’s central bank – pumped over VND42.4 trillion (over $2 billion) into banks via open market operations (OMO) this week, the second highest rate this year after the supply of VND59.44 trillion in the last week of May this year, newswire NHDmoney said, citing Reuters data. |
But the central bank also withdrew over VND30.8 trillion via OMO, thus raising the net-pumping volume to about VND11.54 trillion, a 230 percent week-on-week rise.
The strong capital inflow was injected given the fact that Saigon Commercial Bank, Ficombank and TinNghiaBank are finalizing their merger activity into a new bank bearing the name of the first one with a chartered capital of over VND10 trillion.
The interbank market saw VND68.11 trillion worth of capital transferred among banks in the first two days of this week at the overnight rate of 13.48 percent, while only VND2 billion worth of 12-month lending at the rate of 20.4 percent was transacted.