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April sees unexpected credit growth
The capital provided by credit institutions for the national economy increased sharply in April, according to the State Bank of Vietnam (SBV).
SBV has released a report on the operation of the banking system in April, which says that in April, the amount of capital pumped into the national economy increased by 4.86% over the end of the previous month and increased by 11.16% over the end of 2008. The capital in VND increased by 5.81%, while the capital in foreign currencies by 0.65% over the end of March 2009.
The 11.16% credit growth rate has been confirmed by Governor of the State Bank of Vietnam Nguyen Van Giau. The figure is lower than the credit growth rate of the same period of last year (14.73%) but higher than the growth rate of the same period of 2007.
SBV’s report showed a sharper increase in the credit growth rate in April in comparison with the credit growth rates in the first three months of the year. Monthly reports released by the State Bank of Vietnam showed that the credit growth rate was 0.52% only in January over the previous month, while the rates were 0.23% and 1.92% in February and March, respectively, in comparison with previous months.
The high credit growth rate in April should be seen as a good thing for the national economy. Meanwhile, Giau affirmed that commercial banks are still following the strict requirements on capital adequacy ratio, and that no bank is experiencing difficulties in payment capability.
The figures released by the central bank suggest that banks’ disbursement rate has become faster, while the demand for capital has become higher, especially since the 4% interest rate subsidy programme was applied to medium- and long-term loans as well.
Because of the higher demand for capital, VND deposit interest rates applied by commercial banks in April have been increasing. A lot of banks now apply interest rates above 9% per annum for 36-month term deposits, 8.5% for 12-month term deposits, or issue deposit certificates at high interest rates. Meanwhile, in March 2009, VND deposit interest rates hovered around 8% only.
Also according to the State Bank of Vietnam, capital mobilisation in April did not see considerable changes in comparison with the previous month. The capital mobilised in the month just rose by 3.74% over the previous month (it was 3.4% in March, 1.62% in February, and 0.18% over the previous months).
One of the noteworthy things is that the growth rate in credit in foreign currencies increased slightly in April, again, after it decreased in February and March. The loans in foreign currencies provided by commercial banks in April 2009 increased by 0.65% over the end of March, after decreasing by 2.24% in March and by 2.69% in February, and increasing by 1.91% in January.
US$ interest rates, according to the central bank, continuously decreased in April in comparison with the previous month by 0.5-1% per annum for deposits and by 0.3-0.7% for loans. Currently, the US$ deposit interest rates are now at 1.4-2.81%, while lending interest rates are between 4% and 7% per annum.
VietNamNet, TBKTVN
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