Demand for dollar loans in Vietnam continues to surge but commercial banks say they have become more cautious in offering such loans due to repayment concerns.
Ho Xuan Nghiem, deputy general director of Sacombank, said dollar loans expanded 31 percent in the first five months compared to the end of last year, while dong loans only grew 5 percent.
He said Sacombank now only gives priority to exporters as they will have dollars to repay for their loans. For other companies that need dollar loans to import materials for production, the lender advised them to buy the dollars instead, he said.
Pham Quoc Thanh, deputy general director of An Binh Bank, said his bank was also reluctant to offer dollar loans to clients other than exporters, fearing that they would have difficulties finding enough dollars for repayment later.
Even though the government has asked commercial banks to cut interest rates, lending rates on dong loans are still high, at between 14 and 16 percent a year. Such rates are much higher than the rates of 4.5-6.5 percent set for dollar loans.
The gap between the rates has encouraged many companies to take dollar loans. But experts have warned that such a trend will put a pressure on the dollar supply later this year when businesses begin repaying their loans.
According to the central bank, dollar loans in Ho Chi Minh City alone reached VND160.8 trillion (US$8.4 billion) in the first five months, accounting for 28 percent of all loans.