Vietcombank will be the first bank to cut its lending interest rate in response to the Government's recent resolution. — VNS Photo dantri.com.vn

HA NOI (Biz Hub) – Vietcombank will be the first bank to cut its lending interest rate in response to the Government's recent resolution.

Vietcombank chairman Nghiêm Xuân Thành announced yesterday that his bank would cut lending rate for five prioritised sectors of agriculture, exports, supply-parts industries, small- and medium-sized enterprises and hi-tech businesses, besides start-up firms.

Accordingly, lending interest rates for short-term loans in those sectors will be reduced to 6 per cent per year from today, down 1 per cent.

All existing outstanding loans with interest rate of more than 6 per cent will be also adjusted down to 6 per cent at the maximum.

In addition, a further rate cut even to 5 per cent could be applied for firms which have effective business and production performance and use other Vietcombank products.

Thành said this cut would last to the end of the year. In 2017, Vietcombank will base its rates on the macro economy and the State Bank of Viet Nam's credit policies.

It is estimated that the cut could reduce Vietcombank's profit by roughly VNĐ100 billion (US$4.46 million). However, Thành said, his bank would try to cut other costs to offset the reduction, ensuring the bank's profit plans this year.

Vietcombank's lending market share currently accounts for more than 9 per cent of the entire banking system.

Thành expected that the pioneer move of Vietcombank would create momentum for other banks to cut lending rate to support firms.

"Liquidity at other banks is strong, and a lending reduction is feasible," Thành said, adding that "banks cannot be healthy unless firms are healthy".

Thành was not also concerned that the lending cut in major banks could cause deposit movement toward smaller banks that offer higher deposit rate to lure depositors.

According to Thành, four State-owned banks currently account for 50 per cent of the country's total capital mobilisation. Besides, the central bank also sets lending room for each bank, so that small banks have no demand for capital attraction when they meet the lending room.

Vietcombank's profit in the first nine months of this year is estimated at VNĐ6.2 trillion. The bank's total capital mobilisation in the period rose 12 per cent against early this year, while lending surged 14 per cent.

Thành believes that his bank can meet the 18 per cent credit growth allocated by the central bank this year. - VNS