In October, the State Bank of Vietnam directed credit institutions to mobilise all available resources, cut operating costs, share profits and step up efforts to lower interest rates. Under the directive, banks were required to cut listed deposit rates and rates on newly mobilised deposits by 0.5 percentage points per year for tenors of six months or longer, while reducing lending rates by 1.5-2 percentage points per year for production, business activities and priority sectors.
Hanoi (VNA) - Commercial banks in Vietnam have cut listed deposit interest rates by 0.5 percentage points per year for tenors of six months or longer. This was an initial result of the State Bank of Vietnam's efforts to lower market interest rates amid rising demand for capital to fuel economic growth.
The information was provided by SBV Deputy Governor Pham Thanh Ha at the Government's regular press briefing in Hanoi on November 4.
He said domestic interest rates had come under considerable pressure in recent months as demand for capital surged amid increasingly complex global economic developments, with several central banks raising interest rates. In response, the SBV has rolled out a coordinated package of measures to bring down market interest rates.
In October, the central bank directed credit institutions to mobilise all available resources, cut operating costs, share profits and step up efforts to lower interest rates. Under its directive, banks were required to cut listed deposit rates and rates on newly mobilised deposits by 0.5 percentage points per year for tenors of six months or longer, while reducing lending rates by 1.5-2 percentage points per year for production, business activities and priority sectors.
The measures have begun to yield initial results. In line with the SBV's directive, state-owned commercial banks and wholly foreign-owned banks have generally reduced listed deposit rates by 0.5 percentage points per year, while joint-stock commercial banks have cut them by 0.5-0.7 percentage points.
The cuts in listed deposit rates will provide a basis for commercial banks to further lower lending rates in line with directives from the Government, the Prime Minister and the SBV, he noted.
Data from late October showed that average interest rates on newly mobilised deposits had fallen by around 0.4 percentage points per year compared with mid-October. Average rates on newly issued loans also declined by 0.2-0.5 percentage points over the same period.
More than 20 banks have also announced preferential credit programmes for production, business activities and priority sectors, offering annual interest rate reductions of 1.5-2 percentage points.
Alongside efforts to lower interest rates, the SBV is continuing to implement measures to support liquidity and funding for credit institutions. Ha said the central bank would continue to deploy monetary policy instruments, including open market operations, refinancing and short-term foreign currency-VND swaps.
Timely liquidity support for credit institutions
Regarding monetary policy in the coming period, the Deputy Governor said the SBV would continue to closely monitor domestic and global economic developments and manage monetary policy flexibly to help control inflation, maintain macroeconomic stability and support sustainable economic growth.
The central bank will continue to conduct open market operations flexibly in line with monetary policy objectives and provide timely liquidity support to credit institutions, he said.
In the foreign exchange market, the SBV will closely monitor domestic and international developments and manage the exchange rate flexibly in line with market conditions. Exchange rate management will be coordinated with other monetary policy instruments to stabilise the foreign exchange market, maintain macroeconomic stability, control inflation and aid economic growth.
Regarding credit, the SBV will adopt appropriate management measures in response to macroeconomic developments and the economy's capacity to absorb capital, with the aim of supporting growth, controlling inflation and ensuring the safety of the banking system.
The central bank will also direct credit institutions to maintain safe and effective credit growth, channeling capital into production, business activities, priority sectors and key growth drivers. Banks will continue implementing credit programmes in line with the Government's and Prime Minister's directives while keeping a close watch on lending to sectors with potential risks.
At the same time, banks will accelerate digital transformation in their credit approval processes to facilitate access to bank financing for individuals and businesses while ensuring rigorous and secure lending procedures.
The SBV will continue urging credit institutions to step up efforts to lower market interest rates, Ha said.
Sources: VietnamPlus / Vietnam News Agency
