Starting from August 2019, several Vietnamese banks have unexpectedly announced that they would be cutting interest rates on Vietnamese đồng loans in the government’s designated priority sectors in order to support firms in 2019.
Lê Đức Thọ, VietinBank’s chairman, stated that this is the second time this year that banks have cut lending rates this year in order to help support the government’s intentions for supporting domestic production and businesses, contributing to the development and growth of the nation’s economy.
State-owned banks, which include names such as BIDV, Vietcombank, VietinBank, and Agribank, have reduced the lending rate by 0.5 – 1 per cent per year for loans to firms in the government designated priority sectors.
BIDV has applied the new maximum rate at 5.5 per cent per year, down 1 percentage point against the cap regulated by the central bank, from August 1 until the end of the year. The rate cut is offered to priority businesses in the fields of export, supporting industries and advanced technology.
Vietcombank has applied a similar strategy, by setting interest rates for Vietnamese đồng short-term loans at a maximum of 5.5 per cent per year, dipping 1 percentage point against the central bank’s ceiling rate. These rates are applicable to old and new loans taken out by borrowers who belong to the priority sectors.
The representative of Vietcombank stated that the interest rate cut is being applied on a wide scale, with loans enjoying rate cuts accounting for 38 per cent of the bank’s current funding for short-term loans and 20 per cent of its total outstanding loans in đồng.
Aside from state-owned banks, domestic joint stock banks have also decided to join in on the offering of preferential rates. Customers who are retailers and SMEs are the target for these preferential rates.