Vietnam credit growth rises

Hanoi (VNA) - Credit growth by February 20 rose 0.39 percent while capital mobilisation increased 0.34 percent against December last year, a government report released early this week said.

Compared with the same period last year, credit increased 0.96 percent and capital mobilisation inched up 0.05 percent.

The report said the lending interest rate was stable during the months, but the deposit interest rate was on an upward trend, especially for medium- and long-term deposits, as commercial banks tried to attract idle money from local people after Tet (Lunar New Year) to restructure their capital sources, in order to meet rising medium- and long-term capital demands during the remaining months of the year.

After staying out of an interest hike race of small- and medium-sized banks early this year, all major banks such as Vietinbank, Vietcombank and BIDV have now joined it.

Vietcombank recently increased the interest rate for deposits with terms of more than 12 months from six percent to 6.5 percent per year. A 0.2 percent hike has also been applied on short-term deposits, pushing up the rate to 4.8 percent for two-month deposits, five percent for three-month deposits and 5.4 percent for six-month deposits.

Vietinbank also quoted a 6.8 percent interest rate for 12-month to 24-month terms, up from six percent earlier. The bank has also increased the interest for short-term deposits by 0.3 percent.

The same trend is seen at BIDV, which has increased the interest rate by roughly 0.3 percent for short-term deposits and 0.2 percent for nine-month to 12-month deposits.

After this move, the interest rate gap for long-term deposits between small and large banks has been reduced to 0.8 to one percent from 1.5 to 1.8 percent. Small banks often have to list higher interest rates than large banks to lure depositors.

Banks said the interest rate hike was not because of poor liquidity, but to have enough capital to fund medium- and long-term projects.

Director of Orient Commercial Bank (OCB) Nguyen Dinh Tung said if liquidity was poor, banks must attract short-term deposits to deal with the shortfall. Tung said interest rates would be on an upward trend, adding that the rise would help banks readily meet the expected rising capital demand in the next few months as credit was expected to rise by 18 to 20 percent this year.-VNA