PHOTO: NGOC THANG
In an effort to boost stagnant credit growth, Vietnam's commercial banks have reduced interest rates on old loans. Loans calculated at 15 percent annual interest fell to 5.5 percent of total outstanding loans on April 3.
Two years ago, they comprised 65.8 percent of total outstanding loans.
Loans calculated at 13 percent or higher also fell to 16 percent of total outstanding loans (from 31 percent last June), according to an announcement from Nguyen Thi Hong, head of the Monetary Policy Department under the State Bank of Vietnam during a regular press briefing on Friday.
Nguyen Duc Huong, vice chairman of the management board of Lien Viet Post Bank, said his bank has cut rates on all old loans.
The bank no longer has any outstanding agreements with interest rates of 15 percent or higher and now offers loans at 4.8-13 percent annual interest, he added.
As of April 22, credit rose 0.62 percent over early this year, while deposits increased 3.09 percent, Hong said.
Dao Quoc Tinh, vice inspector of the SBV, said banks reported that bad debts had hit VND 122 trillion (over $5.8 million) by late February or 3.86 percent of outstanding. This bad debt figure was calculated based on government’s decision No. 780, which allowed banks to restructure their loans to help firms access credits more easily.
Without the decision, its estimated that real bad debt would have hit VND308 trillion ($14.7 million) by late February or 9.71 percent of all outstanding loans, he said.
Nguyen Quoc Hung, vice chairman of the Vietnam Asset Management Company, said his firm has bought up VND45 trillion worth of bad debt from banks.