Sunday, August 20, 2017 - 0:08:59

Lower rates fail to spur economy

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Credit growth at domestic banks remains sluggish despite their cuts in lending rates to 17-19 percent, analysts have said.

Figures from the State Bank of Vietnam show by August 30 the sector's credit growth rate reached 8.85 percent as compared with the figure recorded in late 2010. It was much lower than 16.9 percent in the same period last year.

Commercial banks admit there is not much borrowing interest despite the rate cuts on dong loans that have taken them down to as low as 16 percent.

Nguyen Tuan Anh, deputy general director of the Ut Xi Seafood Processing Joint Stock Company, said the rates were still considered too high.

Export businesses hoped the rate would come down to 14-15 percent, he said.

Many banks themselves were not keen to expand lending.

Analysts said the banks were worried about the risk of bad debts since the heath of many companies had weakened during the economic turndown.

It was not easy to find clients with assured solvency, an executive at a major HCM City commercial bank said.

Thus, several banks that had earmarked sums of money to lend had been going slow.

The Viet Nam Export-Import Commercial Joint Stock Bank (Eximbank) said it had planned to lend 3 trillion VND (144 millionUSD) to companies at 18 percent since mid-September, but had disbursed only 500-600 billion VND.

The Southern Asia Joint Stock Commercial Bank (NamABank) earmarked VND0.5-1 trillion at 17-18 percent for clients involved in export-import, agriculture, and rural production, but a spokesperson said only a small portion had been lent.

Vu Tu, general director of Tien Phong Joint Stock Commercial Bank, said many businesses had proved to be discreet and explored the market carefully before deciding to borrow.

Interest rates would remain a key factor this year in enterprises' business decisions, he said.

But he hailed the central bank's decision to cut the rates, adding bank lending would soon accelerate companies'trading and production activities./.

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