Good businesses won’t be denied by banks
Hoang Minh Nhat Joint Stock Company, headquartered in Thoi Lai District, Can Tho City, specializes in rice exports with annual revenue in the thousands of billions of VND. The company’s director, Mr. Nguyen Van Nhut, said that Hoang Minh Nhat is borrowing capital from Vietcombank Can Tho Branch at an interest rate of 5%/year, while the enterprise has also just established a credit relationship with VietinBank Can Tho Branch at an interest rate of only 4.8%/year.
Previously, this rice export enterprise had continuously borrowed capital through Vietcombank Can Tho for 18 years. Mr. Nhut shared that in mid-2023, his company borrowed capital at Vietcombank with an interest rate of 6.5%/year. By the end of that year, the interest rate decreased to 5.5%/year, and now it is 5%/year.
“Enterprises always hope that interest rates will decrease, the lower the better; if not, they should be kept stable,” expressed Mr. Nguyen Van Nhut.
Mr. Nguyen Van Nhut, Director of Hoang Minh Nhat JSC. Photo: Tuan Nguyen. |
Sharing the “secret” to cheap borrowing, the Western rice tycoon said: “For good businesses, accessing bank loans is very easy. They are companies that can demonstrate that their cash flow is always in the right direction, their production and business activities are efficient, or at least they can maintain stability in a difficult context.”
Also, at 5%/year, this interest rate is being applied by VietinBank Hau Giang Branch to Mr. Nguyen Van Hieu’s household loan, a thát lát fish farmer in Kinh Cung town, Phung Hiep district, Hau Giang province. Mr. Hieu commented that bank interest rates have decreased significantly compared to the already low figure of 5.5%/year in the same period last year.
“Last year, I had outstanding debt of 15 billion VND with an interest rate of 5.5%/year at VietinBank Hau Giang, which I thought was very cheap, but this year the bank has reduced it further. Thanks to that, from an initial pond of 4,000m2, I have developed 8 ponds with a total area of more than 40,000m2, with an output of about 500 tons of fish/year,” said Mr. Hieu.
However, the issue for many businesses now is not just interest rates, but also orders.
Mr. Phan Huu Luc, owner of a aquatic feed production facility in Dong Nai, said: “Bank interest rates have decreased significantly in the past year, but businesses are still not daring to borrow because there are no orders. Once there are orders, even with interest rates of 10-12%, we are still willing to borrow.”
According to a survey at VPBank, the normal lending rate currently ranges from 7-9%/year depending on the business rating, a decrease of 0.3-1%/year compared to the end of last year. However, for businesses in priority sectors or those with a good debt repayment history, the lending rate applied by the bank is from 6%-6.5%/year.
This interest rate is also applied by LPBank to businesses with import-export activities.
To support businesses and people in developing production and business and increasing access to bank credit in accordance with the direction of the Government and the Prime Minister, at the end of May, the State Bank of Vietnam (SBV) requested credit institutions to continue to drastically implement solutions to cut costs, simplify procedures,… and strive to reduce lending rates by 1-2%/year.
Many banks have taken action. In reality, lending rates, especially in priority areas, have fallen to around 5%/year.
The director of a commercial bank in the top group said that banks are making every effort to facilitate businesses’ access to capital, first and foremost by reducing lending rates.
“It’s been a long time since we’ve had such a low interest rate environment, with a series of loan interest rate reduction programs from banks. All kinds of fees for retail customers as well as fees for international payment and trade finance customers are also being waived or reduced with the hope of supporting customers and helping them overcome difficulties for mutual development,” said the director.
The bank CEO assessed that credit growth has improved since April 2024 when the real estate market warmed up. In addition, in the past two months, many enterprises in the manufacturing sector have also approached banks for reinvestment loans.
Average lending rate in May: Some banks reduced by more than 1%/year
According to a survey, the average lending rate in May (announced by banks in June) was lower than at the beginning of the year.
At state-owned commercial banks, Vietcombank and BIDV announced average lending rates for May of 5.9% and 5.82%/year, respectively. The difference between deposit and lending rates was 3.2% and 3.13%/year, respectively. The difference in interest rates after deducting related costs of capital mobilization and utilization was 1.5% and 1.84%/year, respectively.
At VietinBank, from May 9 to July 15, priority customers were offered a 0.2%/year interest rate reduction. Accordingly, short-term loans have an interest rate of 5%/year, and medium and long-term loans have an interest rate of 5.6%/year.
 Lending rates, especially in priority areas, have fallen to around 5%/year. Illustration: Nam Khanh. |
At Agribank, this bank announced that since the beginning of 2024, it has adjusted the floor lending rate three times, with short-term lending rates down by 0.5-1%/year and medium and long-term lending rates down by 1-1.5%/year compared to the beginning of the year.
Accordingly, Agribank’s normal short-term lending rate is only from 5%/year, and medium and long-term lending rate is from 7.5%/year.
At joint stock commercial banks, the normal lending rate at VPBank currently ranges from 7-9%/year depending on the business rating, a decrease of 0.3-1%/year compared to the end of last year. However, for businesses in priority sectors or those with a good debt repayment history and low risk, the lending rate applied by the bank is from 6-6.5%/year.
6.5%/year is also the interest rate applied by LPBank to businesses with import-export activities. Meanwhile, BaoViet Bank is applying this rate to small and super small business customers borrowing capital for the purpose of supplementing working capital for business activities.
Notably, the average lending rate for individual customers at ABBank since May 2024 is only 4.74%/year, while the average lending rate for business customers is 6.8%/year.
At VIB, the average lending rate in May was 6.81%/year (individuals) and 5.8%/year (businesses), a significant decrease of 0.66% and 1.18%/year, respectively, compared to the previous month.
The average lending rate at ACB in May 2024 was 6.7%/year, a decrease of 0.08%/year compared to the previous month. The difference between lending and deposit rates has also been narrowed by 0.24%/year to 3.44%/year.
Eximbank reduced the average rate in May by 0.53%/year, announcing a rate of 7.23%/year.
The average lending rate at Sacombank in May was 7.53%/year, a decrease of 0.1%/year compared to the previous month. The difference between deposit and lending rates was 3.43%/year, a decrease of 0.07%/year compared to the previous month.
However, some banks kept their lending rates unchanged from the previous month, such as TPBank, Nam A Bank, SHB, OCB,…
Accordingly, the average lending rate for individual customers at OCB is 7.76%/year, while for business customers, it is 8.02%/year, with a difference of 3.64%/year between deposit and lending rates.
The base lending rate for individual customers with a term of 6 months and 12 months at TPBank is currently 8.05% and 8.25%/year, respectively. Notably, the lending rate for a term of 3 months applied to car purchase loans is 8.95%/year.
SHB still applies the same average lending rate as in April, which is 7.9%/year. The difference between lending and deposit rates is 3.7%/year.
Tuan Nguyen
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