The Bank for Foreign Trade of Viet Nam (Vietcombank) and the Agriculture and Rural Development Bank of Viet Nam (Agribank) announced on Wednesrday that they would cut interest rates on short-term loans in priority sectors this year.

They said the cut followed up on the Government’s instruction to support domestic production and businesses.

These are the first banks to make public their plan to cut interest rates as per a Government Resolution (No 01/NQ-CP dated 01/01/2018) and instructions from the Governor of the State Bank of Viet Nam, to help ease pressure of high interest expenses for enterprises.

Accordingly, interest rates for short-term dong loans will be lowered to 6 per cent per year. Apart from new loans taken this year, the rate would also apply to existing loans with interest rates higher than 6 per cent.

The policy, which will be effective from January 15 to December 31 this year, will apply to the five priority sectors of agriculture businesses, firms producing goods for export, small- and medium-sized enterprises, enterprises operating in auxiliary industries, as well as hi-tech enterprises including startups.

Also yesterday, Agribank reduced its annual interest rates for short-term loans by 0.5 percentage points from 6.5 per cent to 6 per cent, and those for medium and long-term loans from 8 per cent to 7.5 per cent.

Earlier, on Tuesday, Vietcombank Chairman Nghiem Xuan Thanh had said that the bank would save costs and enhance labour productivity to enable a 0.5 percentage point reduction for short-term loans in the five prioritised sectors, which currently make up 42 per cent of the bank’s total outstanding loans.

Last year, Vietcombank had cut its rates by 0.7-1 percentage points for such loans.

At Tuesday’s meeting on tasks set for the banking industry, Nguyen Van Thang, chairman of Vietinbank, said loans given to the five priority sectors accounted for up to 59 per cent of the bank’s total outstanding loans. The bank would announce a detailed plan to cut interest rates soon after the meeting, he said.

Governor of the State Bank of Viet Nam (SBV) Le Minh Hung said at the meeting that the central bank would also slash the lending rate in Open Market Operations (OMO) to help credit institutions.

The central bank announced a credit growth target of 17 per cent for 2018, lower than the 18.17 per cent last year. It will, however, closely monitor the market to make suitable adjustments from time to time, Hung said.

SBV stated that lending this year would continue to focus on the five sectors prioritised by the Government, while limiting capital lent to risky industries like real estate and securities. — VNS