Lending capital resources concentrated on prioritized fields

Currently, the credit growth rate of the banking system in Binh Duong province is only 3.63% compared to the expected target of 14-15% in 2023. In order to accelerate capital flow towards busineses, the banking for customers are deploying more loan products for businesses in priority areas.

Binh Duong's banking still has about 10% room for credit growth in the last months of the year. In the photo: Customers are making transactions at Agribank Binh Duong

Still under the pressure of interest rates

Since the beginning of the year, the State Bank of Vietnam has implemented several measures to create favorable conditions for businesses and people to access credit from the credit institution system, especially the 4 times of downward adjustment of operating interest rates with a reduction of 0.5-2.0% per annum. However, the demand for loans for investment and expansion of production and business activities of domestic enterprises is still low.

Besides, domestic demand also tends to decrease in the first half of 2023. According to the General Statistics Office, in the first 6 months of the year, domestic demand showed signs of weakening when household consumption increased quite slowly at 2.68% compared to the same period in 2022, leading to a sharp decrease in consumer demand for shopping while businesses lacked purchase orders in the face of large inventories, leading to disencouragement to borrow to expand production scale.

Viewing from the money supply side, commercial banks are currently facing a dilemma when customers who are willing to borrow have high credit risk, making banks cautiuos to disburse. In contrast, borrowers with good credit history and short- and medium-term borrowing in need to maintain operations cannot afford so high interest rates.

Nguyen Thoi Hoa Binh, Director of Dong Tay Co. Ltd. said that the production and business efficiency of the enterprise is not significant, so paying high interest rates will be a huge financial burden. Currently, medium and long-term interest rates are at 10% per annum, so businesses face tremendous barriers to in borrowing. "Therefore, banks need to have a clearer view and more realistic appraisal of collateral to help businesses have more cash flow to cover at lower costs," Binh said.

To support and share with customers

Although credit growth is increasing slowly, near the end of the year is the time when the market starts to be active, and businesses increase production, and prepare goods to meet the shopping needs of consumers and implement plans for the new year. Therefore, most businesses have a great need for capital to put into production and business operations.

Recognizing such needs, the State Bank of Vietnam has adjusted and allocated credit growth targets and directed credit institutions to increase capital supply for loans from production and business enterprises in 5 priority areas including agriculture and rural areas, export, small and medium enterprises, supporting industries, and high technology application in addition to monetary management solutions.

Ngo Thi Thuy, Communications Director of Ban Viet Commercial Joint Stock Bank (BVbank), said that in the first 6 months of 2023, BVbank actively implemented strong and positive support solutions to share difficulties with customers. Specifically, BVbank has implemented a preferential package to reduce lending interest rates for additional capital from 0.5% to 2% per annum for production and business activities, and a special loan interest rate package of 10.5% for individual customers. BVbank has also reduced fees for payment, money transfer, and other credit services.

Tran Ngoc Linh, Director of BIDV Binh Duong, said that BIDV is currently approved by the State Bank to adjust the maximum credit growth rate to 14% in 2023 which is immediately deployed throughout the system to ensure timely supply capital needs for businesses. In addition, BIDV proactively implemented solutions to reduce operating costs, restructured assets and liabilities, thereby reducing loan interest rates and service fees. In the first 6 months of 2023, BIDV lowered the lending interest rate floor 4 times with a decrease of 1.1-1.3% per annum. At the same time, it actively designed and issued many short-term, medium-term and long-term credit packages with preferential interest rates from 0.5-2% per annum, with a scale of up to VND 253,000 billion to support customers to recover, maintain, develop production and business operations.

Binh Duong Branch of Vietinbank is also implementing a preferential interest rate package for start-ups. Because the incentive package is highly appreciated by businesses and the capital source of preferential interest rates is well absorbed. On that basis, Vietinbank continued to increase the size of the incentive package to VND 15,000 billion and further reduced the lending interest rate with a new preferential interest rate of only 6.8% per annum. This is a policy to support small and medium enterprises to access cheap capital resources and expand production and business activities.

Reported by Thanh Hong - Translated by Vi Bao