20170710_BSC_Sector insight_Impacts assessment SBV policy rate cut_ICB8355

Interest rate adjustment. At July 7¬th, 2017, State Bank of Vietnam (SBV) announced a document of reducing policy rate (-0.25%/year) and lowering short-term lending interest rate for VND of credit institutions (CIs), branches of foreign banks to some segments and economic sectors. This policy will be effective from July 10th, 2017.

Lending interest rates are expected to decline. In comparison to the previous policies and orientations of reducing lending interest rate of SBV, the policy rate cut this time demonstrates clearly the determination of lowering lending interest rate, thereby boosting economic growth.
•    The policy rate cut is the basis for commercial banks to lower the lending interest rate through policy orientation and reduction of funding cost
•    A number of commercial banks have already announced lending rate reduction such as: LienVietpostbank, VPBank, Agribank và Vietinbank. The effect is expected to follow.

For commercial banks. NIM may decline as lending interest rate down more rapidly than deposit rate and low cost saving from this policy rate cut (about VND 354 billion within 23 commercial banks).

For enterprises. Capital cost and business results of companies are expected to be improved due to lower interest rates. In particular, companies which are operating in priority sectors or industries are the first direct beneficiaries.
 

For stock market. The stock market is expected to rise in the long term due to better business results of companies and lower capital cost.