No escaping interest rate hype

March 06, 2013 | 17:24
Banking sector interest rate debates are continuing to gather steam in 2013.

Scores of local commercial banks assumed the State Bank’s (SBV) proposed 12 per cent credit growth this year would be a challenging task as the market continues to grapple with numerous hardships.

For instance, at Eximbank from late 2012 the bank rolled out a concessionary credit package worth VND5 trillion ($238 million) to promote home purchases with stable 12 per cent, per year interest rate in the first two years.

However, just a small amount of the credit package was disbursed.

Eximbank’s director Truong Van Phuoc assumed the lending rate could hardly go down and it could shed at most 1 per cent only if the inflation target was effectively controlled.
Phuoc pegged mobilising rates this year in the range of 7-9 per cent per year versus 10-12 per cent, per year lending rates.

Holding the same view, deputy general director in charge of corporate customers at Orient Commercial Bank (OCB) Pham Linh assumed the lending rate might slide 1-1.5 per cent only.
This year, OCB continues putting focus on promoting export credit. Therefore, lending export businesses, including those striving to tap new markets, is a bank priority.

OCB also scaled up support to firms in rice, rubber, pepper and cashews fields.

Linh, however, said boosting credit growth was not easy since firms have proven cautious in loan usage.

One former SBV chief said the regulated ceiling mobilising rate would go down at most 1 per cent more by the year end if Vietnam did a smart job with curbing inflation.
Vietnam’s current interest rates are much higher than those in regional countries, averting firms from coming up with fresh investments.

A senior financial expert opined with proposed 8 per cent inflation target this year, the ceiling mobilising rate could hardly fall below 8 per cent, per year.

By Thuy Vinh

vir.com.vn

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional

TagTag: