Since 19 October, several banks have rolled out rate-cut packages, but most target newly disbursed money. Borrowers who signed their contracts earlier kept paying the old rate and could only wait. Figures Agribank presented at an interest-rate forum in early November suggest that existing borrowers have started to see cuts, at least at this bank.
According to Ms. Phung Thi Binh, Deputy CEO of the Vietnam Bank for Agriculture and Rural Development (Agribank), about VND 200,000 billion of existing loans had received a rate cut as of 31 October. Some loans were cut by as much as 2.5% from the rate then in force, depending on the customer group and the purpose of the loan.VietnamPlus In addition, more than VND 100,000 billion of new loans to production, business and priority sectors carry rates 2–2.5% per year lower.Nhan Dan
Two Different Layers of Relief at Agribank
Put simply, Agribank's relief figures cannot be lumped into one number. Ms. Binh described two separate layers, and borrowers easily confuse them.
The first layer is the preferential credit programs running since the start of the year. Agribank currently has 24 programs with a combined size of VND 600,000 billion and outstanding loans of about VND 300,000 billion, priced 2–2.5% below ordinary lending rates.CafeF Customers must borrow under the specific program to qualify.
The second layer began in October. In Ms. Binh's words as relayed by CafeF, Agribank "has immediately implemented rate cuts on existing and new loan balances". The roughly VND 200,000 billion of old loans mentioned above belongs to this layer. The difference is that loans signed earlier are covered too, not only fresh disbursements.
On the bank's side of the cost, Thoi bao Ngan hang (Banking Times) reported on 3 November that, for the cuts rolled out from 19 October, Agribank plans to set aside about VND 2,000 billion from its own financial resources to support borrowers. The earlier preferential programs had already reduced its interest income by about VND 6,000 billion.Banking Times Year-end profit will still depend on funding costs, operating costs and loan-loss provisions, as experts quoted by the paper noted.
To make the policy reach customers, Agribank has told all branches and branch heads to implement it, and has assigned head-office units to inspect, monitor and discipline branches that do not comply.CafeF
What It Means in Monthly Interest
A cut of "up to 2.5%" is the ceiling, not what everyone receives. To see what that means for a wallet, take a VND 500 million loan held by a small business owner, assuming the balance stays flat for the year.
- A 1 percentage point cut per year: interest falls by about VND 5 million a year, or about VND 417,000 a month (VND 500 million × 1% ÷ 12).
- A 2.5 percentage point cut per year: interest falls by about VND 12.5 million a year, or about VND 1.04 million a month (VND 500 million × 2.5% ÷ 12).
Both borrowers were "given a rate cut", yet one saves a few hundred thousand dong a month and the other more than a million. That is why borrowers should ask exactly how much their own loan was cut. On an amortizing loan, the balance shrinks with each principal payment, so the interest saved shrinks too.
When the Interest Actually Paid Goes Down
31 October is the date Agribank tallied its results, not the date every loan changed rate. For an existing loan, the interest paid changes when the new rate is applied to the contract.
How MB described it at the same forum helps explain the mechanism. According to Mr. Le Quoc Minh, Deputy CEO of Military Commercial Joint Stock Bank (MB), when an existing loan reaches its rate-reset date, MB cuts the rate for the customer on its own, with no extra paperwork.VietnamPlus Many medium- and long-term loans carry floating rates that reset on the schedule written in the contract. So an MB borrower sees the new rate from the first interest payment after that loan's own reset date, not from the day the bank announced the cut.
That is MB's practice, and it should not be assumed that Agribank works identically. An Agribank borrower can check in two ways: look at the most recent notice or interest statement for the loan, and ask the branch what the new rate is and from what date it applies.
The other side deserves a look too. According to Hanoi Moi on 1 November, some businesses are still paying more than 11% a year on floating-rate loans that the bank has not yet cut for existing balances. Another company had received notice of a rate-cut program but still had to work with its bank to determine which loans qualify, how large the cut is and what extra documents are needed.Hanoi Moi The article is not specifically about Agribank, but it shows that receiving a notice does not mean the borrowing cost has already fallen.
Next to MB and Vietcombank
At the same forum, two other banks gave their own numbers. MB said its average cut is 1.5–2% for both old and new loans in 5 priority sectors. After the adjustment, average short-term lending rates at end-October were 8–9% a year, and medium-term about 9–10%. Vietcombank, according to Mr. Bach Thanh Long, Deputy CEO of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), has nearly 17,000 customers enrolled in the program, including more than 3,000 businesses and nearly 14,000 individuals and household businesses, with about VND 100,000 billion disbursed.VietnamPlus
Vietcombank's figure measures money disbursed under the program. MB's is an average rate cut. Agribank gave a separate number for the portion of old loans that has been cut, at about VND 200,000 billion. With three different yardsticks, the figures alone cannot rank which bank has cut more.
On the regulatory side, per CafeF, the State Bank of Vietnam said it will keep directing credit institutions to push hard on measures to bring down the general level of interest rates, and will take action against institutions that do not comply.CafeF
Who Gets What from This Round of Cuts
An existing Agribank borrower whose loan falls in the covered group will see the new rate once it is applied to the contract. The size of the cut differs by customer group and loan purpose, at most 2.5% from the rate then in force. New borrowers for production, business and priority sectors get rates 2–2.5% per year lower. On the bank's side, Agribank plans to set aside about VND 2,000 billion for the cuts from 19 October.
For a borrower, the VND 200,000 billion figure is only the big picture. What decides next month's interest bill is three facts about the loan itself: whether it is in the covered group, how many percentage points it was cut, and from what date the new rate counts. The next interest statement will give the first answer.