Interest rates stabilise, lending improves

Monday, Aug 26, 2013 18:33

Lending grew 5.3 per cent at the end of July over the end of last year, a significant improvement on the 0.99-per-cent level recorded in March. — Photo

HA NOI (Biz Hub) ― Interest rates offered by commercial banks had become more stable recently, the State Bank of Viet Nam said in a report late last week.

At State-run banks, deposit rates for dong loans now hovered around 5-7 per cent per year for terms of less than 12 months, and 7.5-8 per cent per year for terms of 12 months or more.

At joint-stock banks, the rates were 6.5-8 per cent for loans deposited for less than 12 months, and 8-9 per cent for 12 months or more.

The common dollar deposit rate was 0.25 per cent for organisations' deposits and 1.25 per cent for people's savings, equalling the ceiling levels stipulated by the central bank.

With regards to dong lending interest rates, State-owned banks were offering rates of 7-9 per cent for prioritised sectors, including agriculture and rural areas, exporters, small-medium-sized enterprises, high-tech businesses and support industries.

For other areas, the rates were 9-10.5 per cent for short term loans and 11.5-12.8 per cent for medium to long term.

Joint-stock banks were setting lending rates at 8-9 per cent for prioritised sectors. In other areas, short-term rates were 9.5-11.5 per cent and medium-long term rates were 12-13 per cent.

Dollar lending rates were now about 4-6 per cent for short term loans and 6-7 per cent for longer.

Nguyen Thi Hong, director of the State Bank's Monetary Policy Department, said encouraging signs could support the nation's credit growth during the remainder of the year.

Lending grew 5.3 per cent at the end of July over the end of last year, a significant improvement on the 0.99-per-cent level recorded in March. This was driven by sharply declining interest rates and banks' efforts to restructure debts and help struggling businesses.

Hong said commercial banks shouldn't just expand lending at any cost as they had to assure lending quality, but driving credit growth remained a focus for the central bank as the nation targeted 12 per cent credit expansion by the end of the year.

The central bank was due to step up progress of the VND30 trillion (US$1.43 billion) property assistance package to boost lending and promptly complete legal frameworks for the Viet Nam Asset Management Company to deal with bad debts effectively.

In an action plan issued late last week, State Bank Governor Nguyen Van Binh asked credit institutions to quickly report bad debt situations and tasked central bank inspectors with closely monitoring arising prolems so that suitable action could be taken.

KPMG Viet Nam Chairman John Ditty told the media recently that the Government had implemented proper restructuring plans, but key problems remained regarding banks' bad debt solutions and their financial situations. The reform process should be hastened, he said.

Hong noted monetary policies would continue to be implemented flexibly as "we can't be subjective about inflation". Inflation had increased 7.29 per cent year-on-year by the end of July, following minimum wage increases and petroleum, electricity, gas and healthcare price hikes.

She urged enterprises to actively restructure operations and adjust business plans to suit the current situation. ― VNS

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