HCMC – Local banks have seen ample capital as the economy posted a low credit demand given the impact of the coronavirus pandemic, Nguoi Lao Dong Online reported.

A conference to review the activities of the banking sector held on June 16 revealed that ending the first six months of this year, the nation reported a credit growth rate of some 2.13% compared with the end of last year. Nguyen Quoc Hung, head of Department of Credit for Economic Sectors under the central State Bank of Vietnam, said the agency has strictly followed the developments of the Covid-19 pandemic to control the credit scale, ensure credit quality and create favorable conditions for corporate and individual borrowers. However, there has been a low credit demand from enterprises, resulting in low credit growth in the first half. Regarding credit structure, the agricultural sector reported a 0.3% rise and the export sector grew 4.94% (compared with a 10% increase during the same period last year). Credit for small- and medium-sized enterprises dipped 0.7%, indicating their hardships as a result of the pandemic. Nguyen Thi Hong, deputy governor of the central bank, said banks should prioritize cash flow issues such as loan rescheduling and extensions, as the demand for new loans from enterprises and citizens remains low. Due to the low credit demand, local banks have seen ample liquidity, facilitating interest rate cuts. Lenders are also trying to cut fees and staff bonuses to further lower lending rates, Hong said. With regard to the interbank market, interest rates are low due to strong liquidity at banks, with the overnight rate, one-week and one-month terms at 0.35%, 0.54% and 1.51% per annum, respectively. Trinh Hoai Duc, deputy general director of Vietcombank, said the bank has applied lending rates as low as 4.5% per annum, lower than the previous record low of 5.5%. Despite the capital surplus, the State Bank of Vietnam and lenders have agreed not to lower lending requirements, asking borrowers to secure solvency, protect the safety of the system and prevent bad debts, stated Vietcombank’s Chairman Nghiem Xuan Thanh.