Local commercial banks are willing to cut lending rates to further support local enterprises and people, central bank’s deputy governor Dao Minh Tu said on April 25.

Local banks and the State Bank of Vietnam are willing to continue cutting interest rates to assist socio-economic development. Photo: The Hanoi Times

The State Bank of Vietnam (SBV) will continue to give further support to assure the banking system's liquidity and assist local banks in lowering their lending rates, Tu said.

The upcoming rate curbs by local banks aim to respond to the request of Prime Minister Pham Minh Chinh at the Government’s meeting with ministries and central agencies to discuss measures to cut interest rates and assist the recovery of the corporate bond and property markets.

Vietnamese banks must take the lead in cutting expenses for people and enterprises to propel socio-economic growth, PM Chinh said.

The Prime Minister urged local banks to propose proper measures to lower saving and lending rates to the Government and the State Bank of Vietnam.

He noted that the money must target the right recipients in the right sectors on reasonable interest rate levels.

The Prime Minister also asked the central bank and local lenders to develop proper solutions and hasten the disbursement of the VND120-trillion (US$5.11 billion) stimulus package for the property market.

Additionally, the Government leader urged the Ministry of Finance to work on possible ways to help the recovery of the corporate bond market. The ministry was also requested to develop a 2% tax rate cut plan.

According to Pham Chi Quang, Director of the SBV's Monetary Policy Department, the central bank has bought back a large amount of foreign currencies and pumped a large volume of dong-denominated cash back into the market.

“The stable exchange rates between the Vietnamese dong and foreign currencies is the reason behind the central bank’s recent repurchases of foreign currencies,” he said.

In addition, he said the recent cuts of the benchmark interest rate on March 15 and April 3 helped credit institutions save expenses and drag the interest rate levels down.

The lending rates have fallen 0.6% from the end of 2022, and they will continue to drop further in the near future, Quang forecasts. On the open market, the interest rates have dropped to 5% per annum from the previous 6% per annum.

On March 15 and April 3, the SBV made two cuts on the benchmark interest rate. The cuts made saving rates decline by 0.5-1.5% per annum for all tenures.

At local banks, the market’s lending rates have fallen to below 8% per annum. Only ABBank and OCB still keep their interest rates above 9% per annum.