Commercial banks to cut interest on old loans
Speaking at a press meeting in Hanoi on July 12, Nghia said reports from credit institutions showed that by the end of May, the bad debt ratio was VND117 trillion(US$ 5.5 billion), accounting for 4.47 percent of the total outstanding credit while SBV’s results revealed the sum of $9.6 billion by the end of March.
He reported that the bad debts were mainly in industrial production and construction areas, as these have been seriously affected by the economic downturn.
Outstanding loans in the real estate sector by the end of May were VND197 trillion (US$0.38 billion) while its bad debt was 12 trillion (US$571.4 million). Outstanding loans in the stock market by the end of May were US$571.4 million with bad debts accounting for 4.1 percent of the total.
The SBV also said bad debts which had high possibility of losing capital accounted for 40 percent of the total. However, these debts were protected by risk prevention funds and mortgaged assets.
He affirmed that SBV is researching how to establish a debt trading company but had yet to submit it to the Prime Minister as it had not been necessary to use VND100 trillion (US$4.8 billion) to buy the bad debt.
Ha added that the company, if established, would have to use several financial tools to resolve the bad debt.
Banks slash loan rate
Some banks announced on July 11, they will be cutting interest rates on existing loans from as high as 19 percent down to 15 percent, starting from July 15. The move follows a guideline issued by the State Banks of Vietnam aimed at helping struggling businesses.
Vietinbank affirmed that it will slash rates to 15 percent per year and even offered firms loans for working capital at 11-12 percent.
“We will increase access to capital for priority sectors including agriculture, export, small and medium sized enterprises and supporting industries,” said Pham Huy Hung, chairman of Vietinbank
Vietinbank is implementing a programme to provide enterprises with loans to purchase rice for temporary stock with preferential loans at 10-11,5 percent.
The Saigon-Hanoi Bank (SHB) also lowered its annual interest rates for all previous loans to 15 percent.
Nguyen Van Le, director general of SHB, said that even before the SBV’s directive, the bank had reduced rates to 15-16 percent for about 5,500 loans and restructured debts for customers with total outstanding loans of VND8.5 trillion (US$404.8 billion).
Loans with rates higher than 15 percent still accounted for one-third of SHB’s total outstanding loans, however, Le said that his bank will trim the rates of all loans to 15 percent immediately.
Agribank has taken a step further by lowering rates to 13-15 percent for its customers. It also said that for clients in financial difficulties, it will look at making further interest cuts and continue providing loans for new feasible projects.
Also on the day, Sai Gon Thuong Tin Bank (Sacombank) unveiled a low interest rate programme for corporate borrowers.
It has earmarked VND2 trillion (US$96 million) for lending at 13 percent.
Another US$50million will be earmarked in the US dollar for import-export firms at rates starting at 4.5 percent.