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Tuesday, July 16, 2024

Lending rate differentials

By Trieu Minh

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Basically, interest rate differentials on the market are a matter of course, as each bank has different capital expenses and thus different advantages and input costs. Lending rates fall sharply VietinBank has recently further cut its lending rate for small and medium enterprises (SMEs) to 5.9% a year for short-term loans in Vietnam dong taken out between now and the end of this year. In fact, the bank has rolled out a credit package known as SME UP since June with a credit line of VND15 trillion, with the lending rate being repeatedly revised down in alignment with the macro-economic situation and to support SMEs. The move by VietinBank corresponds to the general trend that shows the steady decline of lending rates. As most deposits of high interest rates have come due and as the borrowing rate in recent times has fallen sharply, many banks have seen their capital expenses deeply reduced, enabling themselves to lower lending rates. The State Bank of Vietnam (SBV) said the average lending rate for new loans has fallen by 2.0 to 2.2 percentage points, exceeding the central bank’s expectation. The average lending rate at four State-turned-shareholding banks has plummeted to some 6% a year. […]
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