The Thoi Bao Kinh Te Viet Nam, the mouthpiece of the Vietnam Economists Association, has selected the ten most outstanding events in the banking and monetary market in 2005. They are as follows:
1. Monetary market became burning, the central bank tightened monetary policies
In 2005, the central bank has adjusted recapitalization and rediscount interest rates three times and primary rates two times.
The recapitalization rates were raised from 5 per cent to 5.5 per cent, the rediscount rate from 3 per cent to 3.5 per cent, and the prime rates from 7.5 per cent to 7.8 per cent per annum.
Commercial banks’ interest rates for VND deposits rose by 0.48-0.63 per cent per annum and for the USD deposits by 1.25-1.5 per cent over the rate of 2004.
2. Forex exchange was stable, gold prices surged
Domestic gold prices kept soaring to reach the all-time high of VND10.45 million per tael, following the rising prices of bullion in the world market where it recorded a 24-year high at US$544/ounce. On average, the gold price in the country rose by 11.3 per cent in the year, still lower than the rise of 11.7 per cent in 2004, 26.6 per cent in 2003, and 19.9 per cent in 2002.
3. Vietcombank was successful in its first bond issue
The Bank for Foreign Trade of Vietnam (Vietcombank) snapped up VND1.36 trillion (US$86.4 million) from its first bond issue, beyond the target of VND1.2 trillion. The bonds were sold at the interest rate of 6 per cent, compared with the ceiling rate of 8.5 per cent. Especially, individual investors registered to buy 5.25 million bonds after only 2-3 minutes of transactions.
4. Legal environment for monetary and banking operations was further improved
The Government issued the decisions on anti-money laundering and deposit insurance, while the National Assembly ratified the forex law. These legal documents are considered a driving force towards an open and transparent monetary market.
5. Commercial joint stock bank system was scaled up in both quality and size
Commercial joint stock banks were developing strongly in their network, technology, human quality and business scale. Many of them saw asset growth of 50-79 per cent in the year. They kept raising registered capital and there will likely be four banks with capital of more than VND1 trillion in 2006. Shares of some bank were very attractive to investors such as the ACB, Sacombank, EAB, Eximbank, Techcombank and Military Bank.
6. Vietnam issued first sovereign bonds
The Government, for the first time, issued sovereign bonds in the international market, bringing about US$750 million to the country. The ten-year dollar-denominated bonds were sold at a coupon of 6.875 per cent, or 256.4 basis points over corresponding US Treasuries. The issue has attracted much interest, with foreign investors registering to buy up to US$4.5 billion, about six times higher than the offered volume.
7. Treasury bills reached largest revenue so far
The central bank, in coordination with the Ministry of Finance, mobilized nearly VND22 trillion (US$1.4 billion) via 60 auction sessions of treasury bills by the beginning of December, the highest record so far.
8. Credit card market boomed
Vietnam’s credit card market boomed with transaction growth of 300 per cent over last year. By the end of 2005, Vietnam has 17 commercial banks to issue domestic credit cards and six others to issue international credit cards. The country has more than 1,200 ATMs, 12 POS machines and 2.1 million cards of all kinds.
9. Banks focused on improving credit quality
The central bank issued the Decision No. 493 to classify bad debts and risk reserves under the international practices. So far, four State-owned banks have reduced their bad debt ratios to under 5 per cent.
10. Forex transactions reached high revenue
Foreign currency buying revenues reached VND535.86 trillion (US$33.9 billion) in Hanoi and US$20.4 billion in Ho Chi Minh City. Meanwhile selling revenues in Hanoi doubled from last year to reach VND553.56 trillion and in Ho Chi Minh City rose 50.43 per cent to reach US$19.63 billion.
Vietnam Economic Times
Vietnamese
