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  • News
  • News in Vietnam
  • 27 September 2021

Reducing interest rates on corporate loans

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A series of banks have reduced lending interest rates to support individual and business customers facing difficulties due to the Covid-19 epidemic, helping lower lending interest rates.

The negative impacts of the COVID-19 pandemic have directly affected the production and business development of enterprises. Therefore, a series of banks have announced to reduce lending interest rates and focus on implementing policies to support businesses, especially in social distancing. Many workers need jobs and generate income. More than a week after 16 commercial banks agreed to reduce lending rates to support businesses facing difficulties due to Covid-19, the ground for lending interest rates has decreased significantly. The standard reduction is from 0.5 to 2 percentage points.

BIDV said that from now until the end of 2021, it would reduce the average lending interest rate by one percentage point with existing outstanding loans. Up to 2 percentage points will reduce some demanding customers compared to the current interest rate. Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) said that the total amount of interest and fees from banks supporting customers in the last six months of this year is over VND 2,000 billion, and the whole year is over VND 6,000 billion. This time, VietinBank reduced loan interest by up to 1 percentage point for existing outstanding loans and new disbursements.

Bank profits will plummet

Dr. Can Van Luc (Economist) briefly calculated that if it had to reduce one percentage point of interest on the total outstanding loans of the economy or about 9.6 million billion VND, the profit of the banking industry could decrease by about 96 trillion VND, equivalent to half of the profit of the whole industry in 2020.

With the companionship and sharing of this difficulty, it has had a positive impact on enterprises’ production and business development, especially when implementing social distancing. Businesses have put all their efforts into effect production, and the demand for loans increased. Banks simultaneously reduced lending interest rates, restructured payment time, and increased credit investment helped businesses overcome difficulties, took the initiative in the capital, created strength to ensure sustainable growth, and implemented social security policies.