The State Bank of Vietnam (SBV) will continue tightening control over credit quality and operations in the second half of 2009 to ensure the system safety.
Following this orientation, SBV on August 10 promulgated the Circular No.15/2009/TT-NHNN to stipulate the maximum ratio of short-term capital resources which credit institutions in Vietnam are allowed to use for medium and long-term loans. Accordingly, the ratio was reduced from 40 % to 30 % at commercial banks and finance and leasing companies and from 30 % to 20 % at Central People’s Credit Funds. Previously, the central bank sought opinions from market members; thus, this revision did not cause major shocks.
According to reports of the State Bank of Vietnam, payment capacity of credit institutions has certain limitations. Besides, they encounter certain difficulties in mobilising medium and long-term capital which may lead to term risks. Thus, the revision of the ratios is necessary to ensure the system safety, especially the system liquidity.
Interest rate hike heats up
Following the new change, banks may consider hiking interest rates on short and very short-term deposits. Previously, on August 1, Saigon Commercial Joint Stock Bank (SCB) hiked the interest rate by 0.3 % - 0.8 % per annum on 1-3 week VND deposits. Then, many commercial banks like OCB, SHB and HDBank raised their deposit interest rates on August 6 and 7.
On August 10, SCB decided to increase interest rates on VND, USD and EUR deposits. The lender added its rate by 0.1 % - 0.7 % per annum for VND deposits with terms of 1 week - one year. Accordingly, the one-week, two-week and three-week interest rates are respectively 6.5 %, 7.2 % and 7.7 % per annum, the highest of their kinds of the market. The one-month, two-month and three-month terms are set at 8.2 %, 8.3 %, and 8.4 % per annum.
Vietnam Thuong Tin Bank (VietBank) also raised its VND deposits in all terms. The bank added 0.35 % per annum for deposits of 12 - 36 months and 0.1 % - 0.25 % per annum on terms from one week to nine months.
In addition, VietBank also offered interest plus for large-value deposits. Accordingly, customers will receive a bonus interest rate of 0.25 % for more than VND1 billion placed at the lender; 0.22 % to deposits valued from VND500 million - VND1 billion; 0.20 % to deposits of VND200 - 500 million; 0.15 % to deposits of VND100 - 200 million; and 0.10 % to deposits of VND50 -100 million.
Liquidity is still good
In a recent interview with the press, State Bank Governor Nguyen Van Giau said the Government was regulating macro policies in line with the Resolution 30 to avert economic slowdown, maintain reasonable economic growth rate, stabilising macro economy, prevent inflation and ensure social security. This regulation must be based on the national benefits, not only specific groups.
“At present, several small and medium-sized commercial joint stock banks lifted up their deposit interest rates, mainly for terms of months upwards while the rates for other terms remain stable. This interest rate hike will not cause much effect on banks’ profits because deposits with a maturity of less than one year account for 74 % while deposits with 1-5 year maturity make up for 26 % and deposits with maturity of 5 years upwards are less than 5 %. This shows that banks have weighed on profit issues before hiking the rate,” Giau said.
He reemphasised that the interest increase only occurred in several small and medium-sized commercial joint stock banks while large lenders have not responded to the new movement. This showed that the interest rate issue is now of no problem. At present, the bank liquidity remains good and SBV will support the liquidity at commercial banks.
“At a recently bank executive meeting which focused credit activities and reviews on the implementation of the Decree 01/CT-NHNN, I requested commercial banks to build credit growth plans for the last six months of the year to ensure credit structures commensurate to capital structures, to boost production and export, guarantee capital adequacy ratio and control the credit quality. However, SBV will look at banks that hike interest rates and apply suitable treatments,” Giau added.
Quynh Chi
Vietnamese
