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Banks limit loans in gold
Many commercial banks have stopped loaning in gold, while some other banks are requiring interest rates 50 percent higher than previously.
A bank branch on Nguyen Cong Tru street in HCM City said that it has stopped loaning in gold to both businesses and individual clients. Meanwhile, a bank branch on Phan Dang Luu street said it has to consult with the bank headquarters on every application for a loan.
Other banks are still loaning in gold, but requiring higher interest rates. The HCM City Housing Development Bank is now offering to lend at 7.5-8 percent per annum, while the rates were 5.5-6.5 percent previously. The bank said that it had to raise the lending interest rate as gold deposits have become scarcer, while deposit interest rates have been increasing.
Those banks which have stopped lending in gold say that loans in gold have exceeded the set ratio, while the gold capital mobilised is tending to decrease as people have not been purchasing gold to deposit. Meanwhile, the demand for gold loans remains high as gold traders need gold to surf investments.
However, a lot of investors have lost money on gold investments, which is another reason banks hesitate to lend in gold.
Gold deposit interest rates have increased sharply recently. Eximbank last week raised the three-month term gold deposit interest rate to 4.5 percent per annum, while Viet A bank earlier this week raised its rate to 4.6 percent for the same term of deposit. Other commercial banks continue raising gold deposit interest rates in order to prevent their deposits from flowing into other banks offering higher interest rates on deposits.
The interest rates of gold, VND and US$ deposits (percent per annum)
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Banks
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Three month term deposit
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12 month term deposit
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VND
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Gold
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US$
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VND
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Gold
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US$
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Eximbank
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7.8
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4.5
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1.5
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8.1
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3.25
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2
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Viet A
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7.9
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4.6
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2
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8.5
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4
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2.6
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Sacombank
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7.56
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3.6
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1.83
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8.076
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4.01
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2.6
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ACB
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7.5
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4.45
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1.75
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8.05
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3.3
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2.6
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The noteworthy thing now is that the gold deposit interest rate has become higher than US$ interest rate. Explaining this, experts say that the gold market now is hot. In normal conditions, the gold interest rate would not be higher than the US$ rate. Therefore, they say that investors should take advantage of the ‘heat’ of the market to make long-term deposits. However, not many banks mobilise long-term gold capital at high interest rates.
An Eximbank official said that banks are now facing the same problem, that mobilised gold capital is not enough to meet the demand for gold loans from clients. He said that in February and March, when the gold price fluctuated heavily, a lot of people withdrew gold to sell, leading to the decrease in gold deposits at banks.
Stronger greenback pushes gold price down
The world’s gold price on June 3 night lost nearly $30/oz (643,000/tael). On the domestic market, in late June 4, SJC gold was sold at 21.33 million per tael in HCM City and 21.35 million in Hanoi, down by 170,000 dong per tael. The price level represents the decrease of 340,000 dong per tael from the highest peak on June 1.
The bar gold transactions at gold shops remain quiet as people dare not make purchases at this moment because the price remains high.
vietnamnet, tt, vnmedia
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