Several banks in Vietnam said they will comply with a new central bank order to cut interest rates on existing loans to companies to below 15 percent as credit has expanded at a much slower pace than expected.
Nguyen Phuoc Thanh, general director of Vietcombank, said even if banks had not been ordered to cut rates, they should do so, first of all to save themselves.
Vietcombank only has 25 percent of its loans bearing interest rates of 15 percent or more, so it will be easy to follow the instruction of the central bank, Thanh was quoted by news website VnExpress as saying.
He said the banking system is unlikely to post the planned credit growth of 15-17 percent, suggesting the target be revised to 10-12 percent.
Le Hung Dung, chairman of Eximbank, said overdue loans at his bank have amounted to VND3.34 trillion as of the end of June. The bank will try to restructure its loan portfolio and cut interest rates on existing loans to below 15 percent, he said.
According to the State Bank of Vietnam, credit growth has slowed to 0.76 percent from the end of last year. The central bank ordered commercial lenders to lower interest rates to help businesses at a meeting on Saturday.
Nguyen Thi Nga, chairwoman of SeaBank, said that while her bank is not a big one, it will also try to bring borrowing costs down. However, she said that for some clients, even an interest rate of 12 percent is not low enough.
"Interest rates on some existing property loans were lowered from 24 percent to 20 percent but clients couldn't repay the loans. Then they asked for 12 percent, but when the bank accepted to cut rates to that level, they still wanted more time to think," she said.
SeaBank is aiming at a 10 percent credit growth this year, even though it has been allowed by the central bank to boost lending by 17 percent.
Pham Huy Hung, chairman of VietinBank, Vietnam's largest partly private lender by assets, agreeed that the problem now lies in whether businesses can operate efffectively enough to take out loans.
He said his bank can offer loans at 11 percent for good companies.
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