Banks help low-income earners

All yours: Banks offer preferential loan packages with a focus on home purchase loans and consumer lending.

Industry insiders said the month before Tet (Lunar New Year) holiday, which will fall on February 14 this year, was always the most popular period for personal loans, as Vietnamese people needed money for home repairs, shopping and car purchases.

With the aim of meeting the rising demand, many banks are offering preferential loan packages with a focus on home-purchase loans and consumer lending.

Orient Commercial Bank (OCB), for example, has currently launched its own programme COM-B, which provides financial solutions for low-income customers. Accordingly, customers who earn above VND2 million (US$88) monthly can easily borrow COM-B of up to VND70 million.

Truong Dinh Long, OCB’s vice-chairman, told Tin nhanh chung khoan (Securities Express) that although the consumer finance market had developed considerably in recent years, the niche market for low-income individuals was still overlooked.

Targeting on this market, COM-B continuously provides consumer finance products for low-income people with simple procedures and fast processing time.

Meanwhile, Asia Commercial Bank (ACB) has also introduced a home-purchase package worth VND5 trillion ($220 million), meeting the demands of more than 27,000 customers.

ACB is also offering a total loan of VND10 billion ($440,000) for small- and medium-sized enterprises at an interest rate of 6.8 per cent per annum.

Tu Tien Phat, vice-chairman of ACB, said this programme aimed to give manufacturing enterprises a source of preferential loan, helping themm to cut down costs of production and to stabilise market prices for the upcoming Tet.

VPBank is also applying a programme on home purchases at an interest rate of 6.9 per cent per year. Value of the loans can reach VND10 billion with lending term of up to 25 years.

According to figures from the National Financial Supervision Commission, consumer lending surged dramatically in 2017, in which home repair and purchase loans accounted for nearly 53 per cent of the total outstanding consumer loans.

Banking experts attributed this surge to housing prices and interest rates, which are at an acceptable level. In addition, banks continually promote home loans through several preferential programmes, such as cutting down interest rates or extending loan terms.

However, experts also said that to attract more customers in the long run, banks needed to improve their technology, hire quality employees, diversify channels and focus on risk management.