Hanoi (VNA)🉐 - Consumer lending is seeing only a slow rise ahead of Tet (LunarNew Year), despite commercial banks offering preferential loans to bothindividuals and enterprises, Dau tu Chung khoan (SecuritiesInvestment) newspaper reported.

VietnamInternational Commercial Joint Stock Bank (VIB) is offering auto loans tocustomers at 7.6 percent per year. The credit limit is up to 80 percent of thecar value and the loan is for a maximum duration of eight years. Earlyrepayment is free of charge from the fourth year of the loan. Car loansat preferential rates of 7 percent per year are also applying at HDBank. MaritimeCommercial Joint Stock Bank (MaritimeBank) is also launching loans at 5.99 percentper annum for customers who need money to shop for Tet, and at zeropercent to customers who take installment loans via credit card. MilitaryCommercial Joint Stock Bank (MB) is also funding up to 90 percent of theircustomers’ capital needs for purposes of production and business. Similarly,to help small- and medium-sized enterprises (SMEs) during the festive season,Asia Commercial Joint Stock Bank (ACB) has offered loans at an interest rate of7 per cent per year, with a ceiling limit of VND4 trillion (176.21 million USD). The ACBalso has a promotional lending product at 7.5 percent per year for businesshouseholds borrowing capital to supplement capital and expand business premisesand for homebuyers. Though thedemand for capital is rising sharply ahead of Tet, industryinsiders said supply and demand are unlikely to match. Generaldirector of a bank, who did not wish to be identified, said that though thiswas a good time to develop outstanding loans, it would not be that easy ascustomers are expecting interest rates to drop further, an expectation thatcannot be satisfied because the banks’ cost of mobilising capital tends to riseclose to Tet. In fact, mobilisation interest rates have againincreased at many banks by 0.2 to 0.4 percent per year, depending on the terms. Besides,financial expert Huynh Trung Minh said that the US Federal Reserve’s25-percentage point hike in interest rate (from 0.25-0.5 to 0.5-0.75 percentper year) has strengthened the US dollar and put pressure on the dollar/dong exchangerate. When exchange rates rise, interest rates in dong go upas a sufficiently attractive interest rate gap is needed to prevent people fromswitching to depositing in US dollars, Minh said. This partly explains the slowgrowth in lending, though banks launched promotional products at the end of2016. Inaddition, many customers are hesitant to take preferential consumer loans, homeloans or home repair loans because they are worried about high lending ratesafter the promotional period is over. Lendinginterest rates are also forecast to inch up during the early months of 2017because of increasing input costs. Bankingexpert Tran Du Lich said that further reduction of lending rates in 2017 wouldbe tough as inflation has shown signs of rising and there is pressure asanother Fed interest rate hike is expected this year.-VNA