Vietnam's State-Owned Banks Offer Lower Lending Rates than Joint Stock Counterparts

As of April 1st, Vietnamese banks released their average lending interest rates. State-owned commercial banks generally offer lower rates than their joint-stock counterparts, translating into narrower spreads between lending and deposit rates.

Vietcombank, a leading state-owned bank, announced a March average lending rate of 6.4% annually. The difference between its deposit and lending rates sits at 3.4% annually. After factoring in operating expenses and capital costs, the net interest margin is reduced to 1.8% per year.

Agribank, another top state-backed financial institution, also reported March figures. It offers preferential short-term loans to government-prioritized sectors at a favorable 4% annual rate.

Standard short-term loans are at 5%, with medium and long-term at 6%. Credit card rates average 13%. Agribank's overall average lending rate is 7.47%, with an average cost of capital at 6%. This leaves them with a net interest margin of 1.47%.

Vietinbank, also state-owned, reported a 6.3% average lending rate and their spread between lending and deposit rates is 2.45% annually. Vietinbank attributes this discrepancy to the need to cover risk provisions, mandatory reserves, and other operating costs.

BIDV, another leading financial institution, reported a slightly higher 6.49% average lending rate with a 3.12% difference between lending and deposit rates.

Joint stock commercial banks generally announce higher lending rates. Techcombank's February data showed a 7.33% average interest rate for individual customers and 6.88% for businesses. This created spreads of 4.33% and 3.89% respectively.

VIB's February rates mirrored a similar pattern, with individual lending rates at 7.29% (short-term) and 8.6% (medium/long-term). Corporate lending rates averaged slightly lower at 6.83% (short-term) and 7.69% (medium/long-term). VIB's overall interest rate spread is 3.16%.