Banks step up with willing support for COVID-19 times

Banks are coming out with concessionary credit packages for businesses ailing from the COVID-19

Privately-held Asia Commercial Joint Stock Bank (ACB) has just launched a major credit package with scale reaching VND25 trillion ($1.1 billion) which will be running until June 30, 2020 to support customers hit by the novel coronavirus (COVID-19) outbreak.

Of the sum, VND13 trillion ($565.22 million) is earmarked for retail customers and the remaining VND12 trillion ($521.74 million) for small- and medium-sized enterprises (SMEs).

For retail customers, short-term loans with the floor interest rate of 7.5 per cent per annum will be rolled out to serve production and business activities, while the rate for medium and long-term loans will be 8.5 per cent.

Short-term supplemental loans will have interest rates from 6.5 per cent per annum. Corporate customers can borrow from 8.5 per cent per annum to cover procurement and repair machinery and equipment, or build workshops, among others. The interest rate for the first term of the loan could be fixed for 24 months.

For its part, Sacombank has offered a credit package worth VND10 trillion ($434.78 million) with interest rate slashed by 2 per cent per year to both retail and corporate customers serving production and business.

Based on their business plans, corporate customers can borrow in the short-term from 6.5 per cent per annum while retail customers can access loans from 8.5 per cent.

The credit package will be available until June 2020 or end when the sum is totally disbursed.

Nam A Bank is rolling out a preferential loan package with the interest rate 0.5 per cent per annum lower than that regulated in the bank’s current interest rate table applied to dong- and dollar-denominated loans.

The programme will be running until the time the government announces that the COVID-19 epidemic is over and is available for businesses operating in travel, aviation, agriculture, food and beverage, and export-import (between Vietnam and countries suffering from COVID-19).

Meanwhile, Eximbank earmarked VND4 trillion ($173.9 million) to lend to SMEs with concessionary interest rates from 6.99 per cent per annum, while simultaneously launching a credit package valued at about VND3 trillion ($130.43 million) with interest rate from 5.5 per cent per annum tailored to big firms.

Slashing interest rates to support firms affected by COVID-19 would inevitably affect’s banks’ profit, yet in the current context, this will help firms weather this stormy time while helping banks avoid escalating bad debts in case firms have to halt production and businesses.

State-owned leading bank Vietcombank estimates that the scale of loans enjoying lower interest rate due to COVID-19 impacts could be around VND30 trillion ($1.3 billion), with about 300 customers who are big businesses, the interest rate reduction comes to about VND300-450 billion ($13-19.56 million).

According to Nguyen Quoc Hung, head of Department of Credit for Economic Sectors under the State Bank of Vietnam, the loan surplus to sectors hit by COVID-19 has reached VND925 trillion ($40.2 billion) until present, equal to 11 per cent of the banking sector’s total outstanding loan balance.