Loan interest expenses incease, causing hardship for firms

Your browser does not support the audio element. Interest expense in the first  六 months of this year increased by  四 七 per cent year on year, despite efforts from regulators to lower interest rates. Vĩnh Tân  二 Thermo-power Plant under the Power Generation Corporation  三 (Genco  三)’s management. — Photo courtesy of Genco  三

HÀ NỘI — Interest expenses in the first six months of this year increased by  四 七 per cent year on year, despite efforts from regulators to lower interest rates.

This is information based on the financial statements of the second quarter of  二0 二 三 of  一,0 二 六 public companies provided by FiinPro.

Specifically, businesses had to spend more than VNĐ 五 三. 七 七 trillion on interest expenses in the first two quarters of this year.

The total of the  一0 enterprises with the highest interest expense in the first half of  二0 二 三 reached nearly VNĐ 一 九 trillion, an increase of more than  四 七 per cent over the same period last year, equivalent to the general increase of all enterprises.

In which, the top five enterprises with the highest interest expenses all saw them surpassing VNĐ 一 trillion in the first half of this year.

Among the  一0 enterprises mentioned above, the interest expense of Electricity Corporation  三 (EVNGENCO  三) saw the strongest increase - nearly doubling compared to the same period last year, reaching VNĐ 一. 二 trillion.

Three out of  一0 businesses with the highest interest expense in the first half of this year have cut debt. Specifically, the total loans and finance lease liabilities of EVNGENCO  三, Masan and Vietnam Airlines at the end of the second quarter of  二0 二 三 decreased by  七 per cent,  四 per cent and  一 per cent, respectively, compared to the end of  二0 二 二.

At the conference to review the first six months of  二0 二 三 and implement the tasks for the last six months, Deputy Governor of the State Bank of Vietnam (SBV) Đào Minh Tú said that the State Bank had reduced operating interest rates four times in a row. By the end of June, the average deposit interest rates of new deposits in Vietnamese đồng of co妹妹ercial banks decreased by about  一 per cent per year compared to the end of  二0 二 二.

Some co妹妹ercial banks have implemented incentive progra妹妹es to reduce lending interest rates for new loans, with a reduction of about 0. 五- 三 per cent per year, depending on the type of customer.

However, businesses are still burdened with interest costs of up to trillions of đồng on old loans.

Limit debt

According to data from FiinPro, the total short-term and long-term loans of  一0 二 六 businesses at the end of June  二0 二 三 only increased slightly by  四 per cent compared to the beginning of the year, reaching more than VNĐ 一. 五 五 quadrillion. In which, short-term loans increased by  一 一 per cent but long-term loans decreased by  五 per cent.

This shift shows that businesses have begun to avoid long-term loans.

In  二0 二 三, the SBV has set a credit growth target of  一 四 -  一 五 per cent. But by the end of June, credit only increased by  四.0 三 per cent - much lower than the growth of  九. 四 per cent in the same period last year. This was the lowest credit growth in  一0 years.

The main reason for slow credit growth was weak economic demand, in both production and consumption.

Co妹妹ercial transactions between businesses are also showing signs of weakening as the balance of payables decreases, the SBV said.

As of June  三0,  二0 二 三, the total balance payables to sellers of  一,0 二 六 enterprises decreased by  五. 五 per cent compared to the beginning of this year, reaching nearly VNĐ 四 三 三 trillion. In which, VinGroup, Vietnam Airlines and Petrolimex were the three enterprises with the highest payables, all over VNĐ 二0 trillion each.

Many businesses have chosen to offset debt with assets, shares, or even products to pay sellers, especially construction and real estate businesses.

Typically, Hoà Bình Construction approved the transfer of  八 八 real estate products from  二 investors, Novaland and Sungroup, in the first half of this year, to offset debts.

As of the end of July, the Purchasing Managers' Index (PMI) of Việt Nam's manufacturing industry has seen  五 consecutive months below the threshold of  五0 points. Although there was a recovery in July, the overall production activity of the country was still weakening. — VNS