Bank lending interest rates still hot despite cooling inflation

Large-scaled commercial joint stock banks ACB, DongA Bank, Eximbank, Techcombank and Vietcombank slightly revised their deposit rates from the ceiling of 14 per cent, per year to 13.92-13.95 per cent, per year for longer term deposits.

Short-term deposits still benefited from the 14 per cent, per year limit.

For example, local banking behemoth Vietcombank kept the ceiling at 14 per cent, per year for deposits with terms from 14 days to 12 months and 12 per cent per year to over 12-month terms.

While bank lending rates stay high, the State Bank recently eased open market operation lending rates from 15 to 14 per cent, per year.

The lending rates currently fluctuate between 22-24 per cent, per year towards individual customers and 20-22 per cent, per year towards corporate customers at smaller joint stock banks.

Such rates are reportedly “softer” at large banks.

“Though credit growth has been modest at OCB from early year until present, it is not at all simple to pull the [lending] rates down to promote lending,” said OCB’s general director Trinh Van Tuan. OCB made great strides to ease the lending rate by 0.5-1 per cent compared to market average to support customers, said Tuan.

DongA Bank’s deputy general director Nguyen Thi Ngoc Van assumed the negotiable lending rates would slide if the deposit rates cooled in line with the consumer price index (CPI) in coming months.

Association of Small and Medium-sized Enterprises chairman Cao Sy Kiem assumed the deposit rate easing would be more remarkable in the upcoming months when the CPI was under control.

To address the interest rate puzzle, Kiem said banks should be fair with input and lending cost issues. “If deposit rates go down but lending rates remain the same, the beneficiaries will be banks but not those who are in need of capital,” Kiem said.

To ensure accuracy and opportuneness of statistical figures relevant to deposit and lending rates to service monetary policies management, on July 7, 2011 the State Bank enacted Document 5232/NHNN-CSTT requiring credit institutions and foreign bankS’ branches to report on these issues promptly.