A transaction office of SHB (Photo: SHB)Hanoi (VNS/VNA) -Commercial banks are trying to boost individual consumer loans, especially tohome and car buyers, since credit growth had slowed due to low capitaldemand from businesses.
SHB has recently launchedattractive loan packages for home and car buyers, with interest rates of6.5 percent and 6.8 percent per year, respectively, down from 7.5 percent.
In a similar move, BIDVsaid it had set aside 30 trillion VND (1.29 billion USD) to lend toindividual clients with interest rates of 5.5 percent per year for loans withterms less than six months, and 6 percent for 6-12 month loans.These rates are down 0.5 percent against last month.
At Maritime Bank, clients canborrow money to buy cars at 6.99 percent per year while the rate at NCB is 7.99percent.
Other banks offering carpurchasing loans at interest rates below 10 percent include Techcombank at 8.19percent, Vietcombank at 8.4 percent and Military Bank at 8.5 percent.
Foreign banks have also joinedthe push, offering car loans at interest rates below 10 percent.
Woori Bank is lending to fundcar purchases at a rate of 7 percent per year for the first 12 months.
HongLeong Bank quotesa rate of 7.55 percent per year for the first 12 months and 8.55 percentfor 24 months, Standard Chartered 7.25 percent and 8.49 percent, and ShinhanBank 7.69 percent and 8.6 percent, respectively.
Interest rates for home loansoffered by foreign banks are also attractive. Standard Charteredprovides loans at a preferential interest rate of 6.49 percent, HongLeongBank 6.75 percent, Shinhan Bank 6.9 percent and Woori Bank 7 percent.
According to industry insiders,interest rates for car and home loans were nearly equal to 6-12 monthterm deposit interest rates.
Home and car loans account forthe largest proportion of banks’ consumer loans. Home loans are estimated toaccount for 50 percent, and car loans 10 percent.
According to experts, bankshad to cut interest rates for consumer loans to boost lending asdeposits had continued to rise while lending to firms had slowed.
According to the State Bank of Vietnam(SBV), as of mid-August, deposits had increased by 6.3 percent, while loans hadrisen by only 4.13 percent.
Money had continued toflow into banks, despite deposit interest rates falling. Meanwhile,individuals and firms with large amounts of cash were leaving their moneyin banks.
Banking expert Nguyen Tri Hieutold Vietnam News that bankswere focusing more on consumer lending as these loans had interest rates farhigher than other kinds of loans because of the higher risks.
Finance reports from someprofitable banks showed that their profits were due to the increase in consumerloans.
Hieu said at the moment,with the economy struggling to recover from the COVID-19 pandemic,consumer loans would help stimulate general demand, thus supporting economicgrowth.
A recent report from BIDVSecurities Company (BSC) forecast that credit growth in the entirebanking system this year would be only 9 percent, compared with the 13 percentset in 2019.
Analysts from Saigon SecuritiesIncorporation (SSI) estimated an even lower rate. SSI’s recent report on theoutlook for the banking industry in the second half of 2020 forecastcredit growth in 2020 would be around 7.5-8.5 percent.
According to the analysts, thecredit demand may continue to weaken as the country still suffered impacts ofthe pandemic while banks, especially large-sized ones, may not lower theircredit granting standards.
Due to the low credit growth,besides consumer loans, banks were increasing their purchases of Governmentbonds, despite the lower interest rates.
The Hanoi Stock Exchange (HNX)reported that it had mobilised 22.8 trillion VND through Government bondissuances in August. The figure had reached 1,230 trillion VND as of August 31.
Banks were also buying morecorporate bonds. Bankers were the biggest buyers of bonds, especially realestate bonds. In the first half of this year alone, banks bought VNĐ28 trillionworth of bonds issued by real estate firms, which accounted for 40 percent ofthe total bonds issued./.
VNA
