Credit growth is accelerating. According to the State Bank of Vietnam, by mid-October, credit was up 11.4% from the end of last year, while deposits had risen 11.2%. A stable exchange rate and controlled inflation are also giving banks more room to lower rates.
Pham Duc An, Governor of the State Bank of Vietnam, said: "We need to balance banks' earnings so these rate cuts apply to existing loans as well as new lending. That is how the banking sector can make a real contribution to economic growth."
Representatives of several banks say they will continue cutting operating costs and diversify their funding sources to make more low-cost funds available for lending. By late Monday afternoon, 7 banks had announced loan packages with cuts of 1.5 to 2 percentage points.
Le Ngoc Lam, Chairman of the Board of BIDV, said: "We are committed to cutting lending rates by 1.5 to 2 percentage points to support businesses. We will cut operating costs and lower deposit rates to make this possible. With this lending package, we expect to forgo around 19 million US dollars in income to support businesses and households."
Nguyen Thanh Tung, Chairman of the Board of Vietcombank, said: "We will meet the central bank's requirements and also develop our own support packages, with larger rate cuts where possible. We will focus on priority sectors and areas that can support economic growth and social welfare."
The State Bank of Vietnam also stressed that the rate cuts must deliver real benefits to borrowers, with simple procedures. Lending programmes should target production and business, priority sectors and key drivers of economic growth.
