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Weekly information on banking activities (Nov. 27 – Dec. 3, 2008)
The information on banking activities from Nov. 27 to Dec. 3, 2008 are as follows:
1. The State Bank of Vietnam (SBV) decided to further lower the base interest rate to 10 percent p.a. from 11% p.a., starting on December 5 together with other decisions in relation to other interest rates and reserve requirement.
These decisions were announced on December 3 in order to implement the Resolution of the 12th National Assembly on the 2009 Socio-Economic Development Plan and the instructions of the Prime Minister on continuing to curtail inflation, stabilize the macro-economy, maintain sustainable and proper growth rate, proactively prevent economic recession, and secure social protection. Following are the specific decisions singed by the SBV Governor:
- Decision No. 33/2008/QD-NHNN on the lending rate in VND applicable to customers of the local People’s Credit Funds. Under the decision, the lending cap in VND of the local People’s Credit Funds shall not exceed 165% of the base interest rate defined by SBV from time to time;
- Decision No. 2948/QD-NHNN on cutting the base interest rate from 11% p.a. to 10% p.a. and slashing the maximum VND lending rate of commercial banks to 15% p.a. from 16,5% p.a.
- Decision No. 2949/QD-NHNN on reducing the refinancing rate to 11% p.a. from 12% p.a., the rediscount rate to 9% p.a. from 10% p.a., and the overnight rate in the inter-bank electronic payment and the rate of loans to finance short balances in clearing transactions between SBV and commercial banks to 11% p.a. from 12% p.a.
- Decision No. 2950/QD-NHNN on lowering interest rate of reserve requirement in VND of credit institutions to 9% p.a from 10% p.a.
- Decision No. 2951/QD-NHNN on reserve requirement ratios in VND and foreign currencies applicable to credit institutions as follows:
(i) For the reserve requirement ratios in VND and foreign currencies for demand deposits and time deposits with term below 12 months are cut by 2% as below:
+ The reserve requirement ratios in VND applicable to the state- owned commercial banks (excluding the Vietnam Bank for Agriculture & Rural Development-VBARD), the Joint-Stock Bank for Foreign Trade of Vietnam (Vietcombank), urban joint-stock commercial banks, joint-venture banks, foreign bank branches and finance companies are down from 8% to 6%; and for VBARD, the reserve requirement ratios decline to 3% from 5%.
+ The reserve requirement ratios in foreign currencies applicable to the state-owned commercial banks (excluding VBARD), Vietcombank, urban joint-stock commercial banks, joint-venture banks, foreign bank branches and finance companies are slashed from 9% to 7%; For VBARD, rural joint-stock commercial banks and the Central People’s Credit Fund, the reserve requirement ratios are reduced to 6% from 8%;
(ii) The reserve requirement ratios in VND for rural joint-stock commercial banks, the Central People’s Credit Fund and cooperative banks remain unchanged at 1% for the demand deposits and time deposits with term below 12 months.
(iii) The reserve requirement ratios in VND and foreign currencies for time deposits with term over 12 months remain unchanged as below:
+ The reserve requirement ratios in VND applicable to the state- owned commercial banks (excluding VBARD), Vietcombank, urban joint-stock commercial banks, joint-venture banks, foreign bank branches and finance companies are 2%; For VBARD, rural joint-stock commercial banks, the Central People’s Credit Fund and cooperative banks, the reserve requirement ratios are 1%.
+ The reserve requirement ratios in foreign currencies applicable to the state-owned commercial banks (excluding VBARD), Vietcombank, urban joint-stock commercial banks, joint-venture banks, foreign bank branches and finance companies are maintained at 3%; For VBARD, rural joint-stock commercial banks and the Central People’s Credit Fund, the reserve requirement ratios are 2%.
- Document No.10599/NHNN-CSTT, requiring municipal and provincial SBV branches to guide the People’s Credit Funds in their locations to strictly implement the SBV regulations on lending rates and setting their mobilizing rates in VND in consistence with those of other credit institutions operating in the same location.
2. Money market remained stable
+ State –owned commercial banks: the minimum VND lending rate is 11% p.a (The Vietnam Bank for Industry and Trade - Vietinbank, the Vietnam Bank for Agricultural & Rural Development - BARD), the common rate ranged from 13.74% to 14.66% p.a; the minimum USD lending rate is 5% p.a (the Bank for Investment& Development of Vietnam- BIDV), the common rate was quoted at 6.64%-7.54% p.a.
On Dec 4, BIDV reduced its VND lending rate from 11.5% p.a to 10% p.a , the lowest rate in the market. This new rate will be applicable to all customers as of December 8; the priority treatment is given to small and medium enterprises (SMEs), loans for export and rice trading , etc.
As of Dec 5, Vietcombank decreased the preferential lending rate and rate for ordinary customers to 10.5% p.a and 12.48% p.a respectively. Its rate which is applicable to export enterprises committing to sell the bank its foreign currencies is considered as the lowest rate in the market (0.42%/month).
Also, Vietinbank quoted the lending rate floor for short term, medium and long term at 12% p.a and 14% p.a respectively applicable for loans made to customers since Dec 5; the rate for customers in such areas as agriculture and rural development, exports and rice trading is 11% p.a
+ Joint-stock commercial banks: the minimum VND lending rate is 13% p.a (the Lienviet joint-stock commercial bank); the minimum USD lending rate is 6% p.a
- The mobilizing rate continued to be on downward trend as compared to the previous week and the rates are commonly listed as below: (% per year).
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Currency
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Demand
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3 months
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6 months
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12 months
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Group of state-owned commercial banks
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VND
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3,0
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10,4
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10,37
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11,64
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USD
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1,25
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3,03
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3,61
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4,19
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Group of joint-stock commercial banks
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VND
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3,4
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11,72
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11,42
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11,4
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USD
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1,68
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5,34
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5,38
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5,43 |
3. According to the express reports of credit institutions, by December 2, 2008, the average interest rates in VND of most terms in the inter-bank market returned to increase as compared to the previous week, except the 3 month term. Specifically, the average overnight rate in VND is 9.07% p.a. and the average term rates of 1 week, 2 weeks, 1 month, and 3 months are 10.21% p.a., 10.59% p.a., 10.28% p.a., and 12.50% p.a. respectively.
The average interest rates in USD in the inter-bank market were stable.
4. Commercial banks quoted their exchange rates close to the ceiling rate set by SBV, commonly at 16,975-16,980 VND/USD. SBV continued to closely monitor the forex market in order to ensure macro-economic growth while putting trade deficit under control.
5.Management Board’s activities
- On November 28, the SBV Governor had a meeting with a delegation of the Bank of Japan (BoJ) led by Mr. Seiji Nakamura, Member of the BoJ Policy Board.
- On the same day, the Governor also had a meeting with the Chilean Ambassador to Vietnam, Mr.Forge Canelas Ugalde.
- Additionally, the State Bank of Vietnam (SBV) and the World Bank (WB) co-organized the Financial Sector Donors Meeting which was chaired by SBV Deputy Governor Nguyen Dong Tien.
- On December 3, the Governor had a meeting with Mr. James Adams, Vice President of the World Bank (WB), on the occasion of his visit to Vietnam.
SBV
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