On October 19, Pham Duc An, governor of the State Bank of Vietnam, chaired a meeting to discuss measures for credit institutions. The central bank called for deposit rates on terms of six months or longer to be cut by at least 0.5 percentage points a year, alongside reductions of 1.5-2 percentage points in annual lending rates for production, business activities and priority sectors, while maintaining financial system safety.
The State Bank of Vietnam's meeting with credit institutions on October 19 (Photo: SBV).
Le Ngoc Lam, chairman of BIDV’s board, said the bank would immediately launch a credit package worth about VND 100 trillion (USD 3.85 billion), offering loans of up to six months for production, business activities and priority sectors. BIDV pledged to reduce lending rates by 1.5-2 percentage points to support businesses.
“BIDV will cut costs and lower deposit rates to create room for lending rate reductions,” Lam said. The bank expects to forgo about VND 500 billion (USD 19.2 million) in income to support businesses and households through the package. Lending rates will range from 6 to 7 per cent, depending on the loan term, he added.
Tu Tien Phat, chief executive of ACB, told Dantri/Dtinews that the bank had lowered its deposit rate schedule on October 19, with the changes taking effect on October 20. It is also introducing a special lending programme for businesses, offering rate cuts of 1.5-2 percentage points.
Phat said ACB had been running preferential lending programmes for some time. Under an earlier programme that reduced rates by one percentage point, the bank had disbursed about VND 5 trillion (USD 192 million). He said the policy would help businesses strengthen their competitiveness.
Vietcombank, another of Vietnam’s four major state-linked banks, has also announced plans to cut lending rates. Its chairman, Nguyen Thanh Tung, said the bank would develop support packages with reductions potentially exceeding the central bank’s requirements, targeting priority sectors, areas that drive economic growth and activities that contribute to social welfare.
“Rate cuts must be meaningful and must not come with additional administrative requirements,” Tung said. Drawing on its experience supporting customers affected by Covid-19 and storms and floods, Vietcombank will establish uniform criteria across the bank and apply reductions automatically from its head office, with branches handling implementation. Customers will not need to submit applications or visit branches to request lower rates, he added.
Photo: Lam Giang.
According to Dantri, a number of commercial banks have announced rate cuts following directives from the government and the central bank. They include Agribank, BIDV, Vietcombank, Sacombank, Vietbank, LPBank and OCB.
Loic Faussier, chief executive of Sacombank, said the bank viewed its development as closely linked to the health of the economy and the success of its customers. It was therefore continuing to improve governance, optimise operating costs and accelerate digital transformation to support more flexible and practical lending policies.
Sacombank has allocated up to VND 40 trillion (USD 1.54 billion) in preferential credit for business customers, with annual lending rate reductions of two percentage points and preferential rates starting at 8.5 per cent, subject to programme conditions.
Faussier said the funding was expected to help businesses expand production, create jobs and improve competitiveness, while enabling households to manage their finances more effectively.
As Vietnam seeks to strengthen its economic growth drivers, access to reasonably priced credit is increasingly important for businesses’ production and operations.
Some banks have announced cuts to both deposit and lending rates. From October 19 until the end of the year, LPBank is reducing listed deposit rates by 0.5-0.6 percentage points a year across several terms. It is also cutting lending rates by 1.6-2 percentage points a year on new short-term loans for production and business activities.
LPBank chief executive Vu Quoc Khanh said the adjustments were not merely a way to reduce borrowing costs, but also a means of sharing customers’ difficulties and supporting them through different stages of development. The bank aims to direct funding towards the right needs and borrowers, helping customers sustain operations, seize growth opportunities and adapt to market volatility.
OCB said that from October 20 it would cut listed deposit rates by 0.5 percentage points a year for terms of six months or longer. For lending, it is offering reductions of 2.25 percentage points a year on medium- and long-term loans with rates fixed for the first three months, and two percentage points on loans with rates fixed for the first six or 12 months. Short-term loans for production and business activities will receive a 1.5 percentage-point annual reduction during the initial fixed-rate period. The policy applies to OCB Priority Banking members.
Vietbank is launching a preferential credit package worth VND 3 trillion (USD 115 million), with rates at least 1.5 percentage points a year below its standard lending rates. It is also cutting deposit rates by 0.5 percentage points a year for terms of six months or longer.
At the meeting, central bank governor Pham Duc An stressed that meaningful lending rate reductions required banks to cut operating costs, share profits and lower their funding costs. Deposit rates are a major component of banks’ cost of capital; if lenders continue to raise them, there will be less scope to reduce borrowing costs.
Rate cuts should not be applied uniformly, An said. Instead, banks should target the right borrowers, prioritising production, business activities and other priority sectors. Reductions should also be considered for existing outstanding loans as well as new lending, easing the financial burden on operating businesses while supporting their funding needs.