Vietnamese commercial banks said they have to offer various perks on consumer loans in an attempt to boost demand, which is now low.
Ho Chi Minh City-based An Binh Bank, for instance, has launched a promotional campaign offering free Visa debit cards with a value of VND500,000 each to clients who take out consumer loans.
ANZ is giving out free LCD televisions to customers who take out a loan of at least VND500 million for home purchases. Another foreign lender, HSBC, is offering gift cards to people that introduce individual customers to the bank.
Meanwhile, Asia Commercial Bank and Eximbank have both cut interest rates on consumer loans by 1.2-2 percent a year.
Bui Tan Tai, deputy general director of Asia Commercial Bank, said although the bank wants to offer more consumer loans, the demand is not high, particularly for real estate loans.
As real estate prices are not stable, many people now prefer to rent houses instead of taking out loans to buy their own properties, Tai said.
Commercial banks have been asked to cut borrowing rates to ensure local companies have enough capital. As a result, consumer loans are now their favored business, said Dam The Thai, head of Individual Client Department at An Binh Bank.
Many banks consider consumer loans as their key product because they can set interest rates on these loans on a negotiable basis, he explained.
But the problem is when interest rates on consumer loans are too high, up to 22.8 percent a year, it is very difficult for banks to find customers, he said.
According to the State Bank of Vietnam, consumer loans have not expanded over the past five months and now stand at VND122 trillion. That compares to a 17 percent growth in deposits by individual clients.