|Vietcombank has announced a preferential program, reducing loan interest rates|
Preferential loan interest rate but difficult-to-access capital
Although the lending interest rate is considered to increase slower than the deposit rate, with the lending interest rate up to 14-15%/year, any business must be cautious. If businesses are willing to accept high-interest rates, it is not easy to access capital because banks are difficult to disburse.
A representative of a fruit import-export business in Ben Tre shared that the loan interest rate has increased by 2 %/year for both VND and foreign currency loans. The irony is that even if there is money to pay the debt, this person said that he did not dare to repay the bank because he was afraid that the bank would not disburse a new loan when there was an export order. As reflected by many businesses, although the policy of the State Bank (SBV) is to tighten lending to the real estate sector, in fact, banks still focus on this field, so when the room runs out, they tighten the balance so that commercial enterprises also do not have the capital to do business.
In addition, many businesses reflect that if they want to borrow money, they must buy insurance to be considered for a loan by banks. This increases costs and makes it more difficult for businesses, especially when input costs are also under increasing pressure.
It can be seen that the liquidity problem in the market is making it difficult for businesses to borrow capital. According to the survey, by the end of September 2022, in many banks, the lending speed is much faster than the mobilization of savings deposits. For example, the loan/deposit ratio at VPBank is up to 145.1%; SeABank is 132.3%; Techcombank is 128.7%; VIB is 119.6%; HDBank is 118.6%…
Therefore, some banks have announced preferential programs and reduced lending rates to stimulate credit demand at the end of the year and “score” waiting for a new credit boom. For example, ACB has developed solutions to support individual and corporate customers, such as reducing interest rates, getting credit lines ready and offering fee incentives. HDBank spends VND 120 billion to reduce VND lending interest rates for more than 43,000 customers in many business fields. Agribank further reduced the loan interest rate by 20% to support customers at the end of 2022. Meanwhile, Vietcombank decided to reduce the interest rate by up to 1 %/year for loans to corporate and available individual customers. This interest rate reduction, with a credit size of more than VND 500,000 billion, is the largest reduction of Vietcombank’s outstanding balance…
Unlocking cash flow for production and business
According to the socio-economic report of the General Statistics Office, in the first 11 months of 2022, an average of 17.7 thousand enterprises were newly established and returned to operation a month. However, the number of enterprises withdrawing from the market was 132.3 thousand enterprises, an increase of 24.3%. On average, 12,000 businesses withdraw from the market every month.
Moreover, the purchasing managers’ index (PMI) of Vietnam’s manufacturing industry dropped from 52.5 points in September to 50.6 points in October, and the number of new orders has increased slowly since October in major export industries. Therefore, the index of industrial production (IIP) in November is estimated to increase only 0.3% over the previous month and 5.3% over the same period last year.
Recognizing the situation of industrial production facing many difficulties, the report on industrial production and commercial activities in November and eleven months of 2022 of the Ministry of Industry and Trade stated that the immediate solution is needed to remove capital and open cash flow for production and business; proposing the competent authorities to allow enterprises to continue with tax and credit support policies such as during the pandemic period.
According to economic expert Assoc.Prof.Dr. Tran Dinh Thien, the capital dismantling must be the top focus and based on the projects, it should not give general regulations. It will be difficult to approve and disburse. This expert also emphasized that if we do not focus on saving businesses, the economy may lose the results. At this time, there is a need for understanding between the Government and businesses, as well as in the structure of the business community. There must be mutual understanding. Especially in the banking system, the Ministry of Finance and businesses must be transparent with each other.
Giving a forecast of when businesses will overcome difficulties in capital flow, economist Dr Dinh The Hien said that the capital-intensive level of enterprises is increasing sharply, leading to a lack of money. Although it will take six months for Vietnam’s economy to stabilize the macro-financial system, by the second quarter of 2023, the financial system, trade and services will be stable, and capital flow will return to normal for manufacturing enterprises. In addition, some economic experts also said that the cooling of the USD is an opportunity for banks to review lending rates to businesses, creating room for the SBV to control the VND interest rates, and regulate the market. VND market in the direction of injecting liquidity, maintaining low interbank VND interest rates in order to reduce capital costs for the economy and support growth.