VietNamNet Bridge – Some economists say commercial banks now make “super profit” when keeping the input and output interest rate margin at six percent. Meanwhile, banks have denied this.
Commercial banks have been described as the “sinecurists” which can easily make high profit by imposing high lending interest rates.
Nguyen Tri Hieu, a well-known economist, said the average deposit interest rate of the whole banking system is 7 percent, while the average lending interest rate is 13 percent per annum, which means the interest rate margin of six percent.
“This is an unreasonable figure. If banks continue maintaining such a high margin, they would not exist for a long time,” Hieu said.
“The six percent margin is generated by the unhealthy operation of banks which have been harmed by the bad debts,” he continued, adding that if credit institutions operate in a healthy way, the margin would be narrowed to 3 percent.
Meanwhile, Vu Dinh Anh, a well-known economist, has noted that it is the high interest rate which has created a big interest rate margin. However, Anh affirmed that the margin is not high at all, if counting on all the expenses banks have to bear.
He explained if the banking system pays 8 percent per annum for deposits and lend at 12 percent, it would have the turnover of VND120 trillion. However, it cannot pocket the whole sum of VND120 trillion, because it still has to pay salaries to 20,000 workers at 100 credit institutions, and pay for irrecoverable loans.
Nguyen Duc Huong, Deputy President of Lien Viet Post Bank, has affirmed that the big margin does not exist, saying that the profit of 3 percent would be enough to be ideal to the banks.
Huong said of every VND10 billion worth of capital banks have mobilized, the VND9 billion bears the high deposit interest rates of 10-12 percent which were applied one year ago. Meanwhile, in fact, many banks, in an effort to scramble for depositors with other banks, paid higher interest rates than the announced rates.
“The 3 percent interest rate margin would be ideal for us,” Huong said. “I know some banks which have minus profit, but still have to lend at low interest rates and pay high for deposits.”
Vietcombank’s Deputy General Director — Pham Quang Dung, said the input and output interest rate at Vietcombank is 3 percent.
“If I can obtain the sky high margin of six percent, I would either receive the first class medal from the state, or I get sacked. The latter scenario is more likely to happen,” Dung said. “If we did this, we would come contrary to the current regulations.”
A senior executive of Agribank has confirmed that the interest rate margin is four percent, which does not include the provisioning against risks for the loans and other kinds of expenses to maintain the operation.
Replying to the criticism from businesses that banks deliberately hold the interest rates at high levels and refuse to share difficulties with businesses in the economic downturn, a banker said that banks would “kill” themselves if maintaining overly high interest rates.
Former Governor of the State Bank — Cao Sy Kiem, has also noted that the banks’ liquidity is now very good and they now try to slash interest rates and offer preferences to boost lending instead of the keeping high interest rates to make the capital outflow stuck.
Phuoc Ha