VietNamNet Bridge – Usable capital in excess, lending subjects have been narrowed – these are the biggest problems for commercial banks nowadays.

Marketing for bank capital

Banks have begun a new race to find more clients to lend to. Eximbank has promised to disburse within two days any loans to fund real estate purchasing deals in the urban areas of Phu My Hung, Van Phat Hung, and Vista. The lending term of the loans may be extended up to 20 years.

Ocean Bank has marketed a completely new banking product, aimed at female clients. Women can borrow money from the bank for their consumer needs with three-year loans worth up to VND200mil with no mortgaged assets.

ABB Bank has announced it will provide loans to fund individual plans on buying houses and cars. The interest rates for the loans with no mortgaged assets prove to be very attractive, from 0.99% to 1.05% per month. VIB Bank has drawn special attention from the public by launching a chain of lending products which consist of several tens of retail products while announcing it will access clients in a new way.

Facing big difficulties

A banking expert said that commercial banks were all facing capital excess, and it is because they offered overly high interest rates for VND deposits in the first months of the year. Small banks sometimes offered the rates of 10% per annum, while the basic interest rate announced by the State Bank of Vietnam has hovered around 8.25%.

The scenario is now repeating, but with US$ deposits. Over the last three months, the US$ deposit interest rate on the domestic market has climbed to 5.7% per annum (12-month term deposit), though commercial banks have been informed that FED will cut the interest rate to below 5%.

“It is quite a surprise that the interest rates on the domestic market are going in the opposite direction as the FED’s rate. I have never seen this,” said Ly Xuan Hai, Director General of ACB. Normally, Vietnamese banks raise or lower their interest rates after FED raises or lowers its rate.

The higher capital mobilisation interest rate helped raise big capital. In the period between the second and third quarters of the year, the increase in mobilised capital was always double the loans.

ACB, for example, had mobilised VND58,000bil ($3.62bil) by September 25, while the loans were just one-third of this sum.

Banks now have no other choice than cutting lending interest rates. Phuong Nam Bank has cut interest rates for all its credit products by 0.05%-0.2% per month. Meanwhile, the loans to fund studying abroad will enjoy further decreases of 0.02%-0.15% per month.

(Source: Lao dong)