Banks to cut loan interest rates to improve liquidity

Sixteen banks in Vietnam have committed to reducing their loan interest rates by 0.5-3.5 percentage points to below 9.5% per annum to help improve the Vietnamese banking system's liquidity.

The lenders include BIDV, Agribank, Vietcombank, ACB, Eximbank, Techcombank, MBBank, BIB, SHB, and others. In particular, BIDV, a Big-4 bank in the country, cut its loan interest rates by 0.5-2.5 percentage points for loanees from prioritized sectors, under impacts of the Covid-19 pandemic, with import-export activities, and others.

Agribank, another Big-4 lender, reduced its rates by one-fifth for loans as of November 30. For loans made in December, this cut is available just for some sectors.

Vietcombank, also a Big 4, lowered its rates by one percentage point to 175,000 group and individual customers.

Nguyen Quoc Hung, general secretary of the Vietnam Banks Association (VNBA), said some banks had earlier set high deposit interest rates at 9-10% and loan interest rates even higher at up to 11.5%. These capital costs were too high, he said.

Amid banks' interest rate race, citizens' deposits rose 6.78% year-on-year to VND5,660 trillion ($239.78 billion) in October, according to the State Bank of Vietnam's data.