Source: National Financial Supervisory Commission (Infographic: VNA) Hanoi (VNA) -The National Financial Supervisory Commission (NFSC) has reported that creditin the first month of the year saw a growth rate of 1 percent, the highestmonth-on-month increase over the past five years.
Credit inVietnamese dong until January 31 rose by 1.6 percent from thefigure at the beginning of the month, while credit in foreign currencies wentup 1.6 percent in the same period.
In terms of creditstructure, short-term lending accounted for 45 percent of total outstandingloan, while medium and long-term lending made up the rest. The proportion ofcredit in dong in the total outstanding loan remained at 91 percent, thesame level as January 2016.
The high credit growthalong with the 1.6 percent decrease in the month’s deposit (compared with thesame period last year) made the average credit/deposit ratio increase to 88.2 percentfrom 86.8 percent of the end of last year.
In January, creditinstitutions experienced slight liquidity pressure, which was reflected in theovernight interest rate recorded at 5 percent per annum in the month. The ratereduced to 3.65 percent per annum by March 1.
The State Bank of Vietnamalso had to inject more than 200.3 trillion VND (8.89 billion USD) via the OpenMarket Operation to support liquidity.
According to thecommission, there was not much fluctuation in the deposit interest rates inJanuary. However, the market still saw some banks offering interest rates forshort-term dong deposits that were up by between 0.1 and 1.2 percentagepoints compared with the levels offered before Tet (New LunarYear).
The commission attributedthe increase in deposit interest rates partly to the regulation that theproportion of short-term loans used for medium and long-term lending must notexceed 50 percent. The regulation came into effect at the beginning of theyear.
Meanwhile, lendinginterest rates were kept stable.
However, according toexperts, interest rates are still under pressure.
The research group ofthe Bao Viet Securities Company predicted the deposit and lending interestrates this year would likely increase by 0.5-1 percentage per year.
The prediction wasmade based on three factors. First, the credit would continue growing at highrates (at 17-18 percent) to support economic development. Second, inflation mayalso be on the rise, which makes nominal interest rate higher. Last, the US Fedis expected to make three more interest rate adjustments this year and the SBVmust maintain a reasonable gap in the rates between the United States andVietnam, which would put pressure on dong interest rates.
Nguyen Duc Do, deputyhead of the Institute of Economics and Finance under the Academy of Finance,said bad debt is still an obstacle in the banks’ effort to reduce lendinginterest rates.
According to SBV, the VietnamAsset Management Company will have to recover non-performing loans worth 190trillion VND.-VNA
Credit inVietnamese dong until January 31 rose by 1.6 percent from thefigure at the beginning of the month, while credit in foreign currencies wentup 1.6 percent in the same period.
In terms of creditstructure, short-term lending accounted for 45 percent of total outstandingloan, while medium and long-term lending made up the rest. The proportion ofcredit in dong in the total outstanding loan remained at 91 percent, thesame level as January 2016.
The high credit growthalong with the 1.6 percent decrease in the month’s deposit (compared with thesame period last year) made the average credit/deposit ratio increase to 88.2 percentfrom 86.8 percent of the end of last year.
In January, creditinstitutions experienced slight liquidity pressure, which was reflected in theovernight interest rate recorded at 5 percent per annum in the month. The ratereduced to 3.65 percent per annum by March 1.
The State Bank of Vietnamalso had to inject more than 200.3 trillion VND (8.89 billion USD) via the OpenMarket Operation to support liquidity.
According to thecommission, there was not much fluctuation in the deposit interest rates inJanuary. However, the market still saw some banks offering interest rates forshort-term dong deposits that were up by between 0.1 and 1.2 percentagepoints compared with the levels offered before Tet (New LunarYear).
The commission attributedthe increase in deposit interest rates partly to the regulation that theproportion of short-term loans used for medium and long-term lending must notexceed 50 percent. The regulation came into effect at the beginning of theyear.
Meanwhile, lendinginterest rates were kept stable.
However, according toexperts, interest rates are still under pressure.
The research group ofthe Bao Viet Securities Company predicted the deposit and lending interestrates this year would likely increase by 0.5-1 percentage per year.
The prediction wasmade based on three factors. First, the credit would continue growing at highrates (at 17-18 percent) to support economic development. Second, inflation mayalso be on the rise, which makes nominal interest rate higher. Last, the US Fedis expected to make three more interest rate adjustments this year and the SBVmust maintain a reasonable gap in the rates between the United States andVietnam, which would put pressure on dong interest rates.
Nguyen Duc Do, deputyhead of the Institute of Economics and Finance under the Academy of Finance,said bad debt is still an obstacle in the banks’ effort to reduce lendinginterest rates.
According to SBV, the VietnamAsset Management Company will have to recover non-performing loans worth 190trillion VND.-VNA
VNA
