Banks report strong liquidity ahead of Tet

Saturday, Jan 31, 2015 11:21

Transactions at a VPBank branch in HCM City. Liquidity in the entire banking system has been stable, thanks to pledges and timely actions from the central bank. — VNA/VNS Photo Tran Viet

HA NOI (Biz Hub)— Commercial banks said that 2015's Tet (Lunar New Year) festival has been the most easy so far, in terms of liquidity, and even though it is around the corner, according to Dau Tu Chung Khoan.

Previously, banks had been concerned about liquidity during Tet, the country's largest holiday, which will be celebrated in the middle of next month, due to growing cash demand.

However, the Deputy General Director of the Orient Commercial Joint Stock Bank Dinh Duc Quang said the situation had changed this year. Liquidity at commercial banks was very stable and inter-bank rates during the past few days had been listed lower than the buying rates quoted by the central bank, Quang said.

He added that all banks had to often remain cautious and be prepared during the festival, so that no factors causing market concern arose.

The Viet Nam Bank for Agriculture and Rural Development's General Director Tiet Van Thanh also said the Agribank's liquidity in Vietnamese dong was very good.

Quang said banks often report concerns about liquidity, which forces them to increase liquidity reserves, especially when they see fluctuations in the forex market, a rising interest rate or high inflation. However, this year, everything had remained stable so banks are not that concerned about liquidity.

Pledges and timely actions taken by the central bank and management agencies to ensure liquidity during the past had helped stabilise the psychology of the entire banking system and the market as well, Quang said.

Vo Tan Hoang Van, general director of the Sai Gon Commercial Bank, also attributed the market stability to the central bank's success in managing interest rates, as well as forex and the gold markets.

Besides, Quang said, unexpected cash demand arising around Tet this year was also lower than earlier years as firms were currently scrutinising the payment of salary and bonus for the occasion.

The Deputy Governor of the central bank Dao Minh Tu affirmed that the central bank had so far implemented measures to supply enough cash to all SBV's branches and credit institutions nationwide to ensure that the rising demand of local people is met during the Tet festival.

According to the latest survey on business trends at credit institutions and foreign banks' branches in the first quarter this year, liquidity in the banking system has continuously improved. Roughly 89 per cent of surveyed credit institutions said their liquidity had improved from last year and is currently in a good condition. Strong liquidity will continue to be maintained this year too, they forecast.

Under the survey, the institutions also anticipated that their deposits will rise by 4.5 per cent on average during the first quarter this year and surge by 14.35 per cent for the entire year. — VNS

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