The central bank’s back-to-back interest rate cuts this year has enabled banks to lower borrowing costs. This move is likely to highlight differences in net interest margin (NIM) in the last two quarters of the year. Capital absorption capacity remains weak As of September 29, outstanding loans in the banking system totaled nearly VND12,700 trillion, a 6.92% increase compared to the end of 2022, according to Deputy Governor Pham Thanh Ha of the State Bank of Vietnam (SBV). The central bank has set a credit growth target of 14-15% for 2023. In late July, it determined a credit growth limit for each bank, aiming for a total rate of 14%. The modest credit growth can be attributed to various objective factors, including reduced demand for investment, production, business, and consumption. Additionally, certain customer groups in need of loans fail to meet lenders’ criteria, particularly small- and medium-sized enterprises. Moreover, in a challenging economic environment that increases business risk levels, banks find it extremely hard to determine whether to lend or not, as they must maintain credit standards to ensure credit safety. In the first nine months of 2023, banks gradually lowered lending interest rates, with corporate borrowers seeing a common […]