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Demand for loans is very low

Demand for loans is very low

Saturday 18, 07 2020
Capital absorption of the market is quite weak. In the first 6 months, domestic credit growth was only 2.45%, while it was 7.33% in the same period last year.

Up to the beginning of July 2020, although the interest rate dropped, people were not too interested in borrowing because they had not found a capital consuming channel. Under the impact of the Covid-19 epidemic, many businesses, business households, and individual customers have not found investment channels, nor have they boldly expanded production and business.

At many banks today, deposits are still growing higher. According to data from the State Bank, from the beginning of the year to May 20, the amount mobilized from economic organizations and residents of banks is estimated at about 162,700 billion dongs, an average of over 1,160 billion dongs/day. While lending, only reached about 108,200 billion, equivalent to 773 billion per day. In many localities, there is a phenomenon of excess capital, mobilizing more loans.

Excess capital makes deposit interest rates on the interbank market and business organizations and residents recently decline. At the same time, lending rates also decreased to stimulate borrowers.

Data from the General Statistics Office show that capital mobilization to June 19 increased by 4.35% compared to the end of 2019, nearly double the credit growth at the same time. The liquidity of commercial banks is now in excess. Interbank interest rates also dropped to an all-time low.

Demand for loans is very low

The number of commercial banks announced to reduce deposit rates continued to expand in the past week. Deposit rates currently are 0.75-1% lower than 6-month tenors and 1-2% lower than 6-month tenors compared to the end of last year.

Since the Covid-19 pandemic to date, the banking industry has reduced deposit rates 3 times. From the beginning of July 2020, in many banks, the interest rate for less than 6-month terms was only 3.9% -4.05% / year, the highest interest rate for 13 months was about 7.8% / year.

Not only the interest rate on market 1 (the market between commercial banks and organizations and individuals), but the interbank interest rate (lending interest rate among banks) also dropped sharply, showing that liquidity The bank is very abundant. Therefore, many banks have offered many preferential interest rate packages for businesses and individuals to push capital to the market.

The State Bank also requires non-credit institutions to reduce input interest rates to reduce costs, and create conditions to lower lending rates to support the economy. In the context of strong demand for loans, the banking system is not short of capital, so many banks have accepted this to further reduce lending rates.

The wave of lowering interest rates continued to take place in many commercial banks. New interest rates are constantly applied with the trend of adjusting in many terms. Currently, the lowest interest rate on the market is recorded at Techcombank. In the latest interest rate table of this bank, the interest rate at the 1-month term deposit is only 3.15% -3.65% (regular customers, depending on age and amount). If customers receive interest in advance, they will be paid an interest rate of 3% / year.

Vietcombank has also just lowered the interest rate for long-term deposits: 36-month term deposits to 5.8% / year, down 0.2%. This is also the lowest interest rate of the same period in a group of 4 state-owned commercial banks. Previously, Vietcombank, Agribank, BIDV, and VietinBank simultaneously lowered deposit interest rates for many terms, of which short terms from 1-2 months fell to only 3.7% / year. Some other banks such as Nam A Bank, VPBank, TPBank, HDBank ... also reduced input interest rates.

Experts said that under the influence of the current Covid-19 epidemic, the capital absorption of the economy slows down. The reason is that the enterprises do not have any output yet so big companies are not interested, nor do they need to borrow capital to deploy new projects. In contrast, for small businesses, due to the impact of the disease on production - business activities, banks are also cautious when pouring loans.

Real estate credit increased slowly

Source: Vietnam Finance

Banking & Finance

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