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Monthly information on banking activities (August, 2010)
I- State Bank of Vietnam activities:
1. Management of credit and monetary policies:
The SBV continued to manage the monetary policy in a flexible and prudent manner with the aim of stabilizing macro economy, curbing inflation and achieving the economic growth rate of about 6.5%. In particular:
- Maintaining the base interest and refinancing rates of 8% p.a, re-discount rate of 6% p.a, open market operations (OMOs) interest rates of 7-8% p.a; and the rate of 8% p.a. for overnight inter-bank electronic payment and financing the shortage in the clearing of the SBV for banks.
- Continuing to flexibly manage open-market operations, mainly bids of valuable papers to ensure the liquidity and safety of the system, maintain the stability of the money market and send out signals of interest rate reduction at reasonable levels; continuing financial support for credit institutions by the means of refinancing and foreign currency swaps.
- Adjusting the average VND/USD interbank exchange rate to 18,932 from 18,544, down by 2.1 percentage point with the aim of contributing to trade deficit control, restricting the foreign currency hoarding by enterprises and individuals and actively reducing the pressure on foreign currency demand in the coming time.
- Promptly taking measures and requiring credit institutions to strictly conduct final settlement of overseas gold trading accounts by July 31, 2010. Generally speaking, credit institutions conducted final settlement of overseas gold trading accounts as scheduled, without causing any major impact on the gold market. The gold market remained stable and domestic gold price closely followed the movements of the gold price in the world markets.
2. Developing a safe and sound system of credit institutions:
- Regarding the regulation on prudential ratios in operations of credit institutions, the SBV instructed the relevant entities to revise Circular No.13/2010/TT-NHNN dated May 20, 2010 for better understanding and implementation by carefully reviewing concepts and methods of calculating the prudential ratios, removing any shortcomings and ensuring the harmony in implementation by credit institutions.
- Monitoring and assessing the loans of banks for the Vinashin Group; and formulating plans of the banking sector to participate in the restructuring of this Group under the direction of the Prime Minister.
- Continuing to guide credit institutions to conduct recapitalization in line with Decree No. 141/2006/ND-CP, and working out plans for dealing with those credit institutions which do not meet the recapitalization requirement.
- The SBV granted license to the Tinh Thuong limited liability microfinance institution of the Vietnam Women's Union, and at the same time, approved the revised charter and the Chairman and members of the Board of Directors, Director and members of the Control Board, and CEO for the 2010-2015 tenure, and 18 branches of this institution.
3. Implementing the Law on the State Bank of Vietnam and the Law on Credit Institutions:
The SBV held a conference to disseminate the two new banking laws to heads of the SBV entities and CEOs of credit institutions. Regarding the formulation of guidelines of the two banking laws, the SBV has been doing its best to develop the required documents in a timely manner to submit to the Government for issuance.
4. Speeding up the implementation of the non-cash payment plan :
The SBV directed commercial banks to develop plans to promote the card payment via POSs, and coordinate with card switching companies to urgently update software for inter-connecting POSs in order to accept cards of various commercial banks. The SBV also coordinated with the relevant ministries and agencies to develop the POS system.
5. To implement other main tasks
- The SBV approved the Project of Vietnamese Money Market Development on August 12. Accordingly, the SBV took measures in order to gradually improve sub markets, boost liquidity and short-term flow of capital among market players, and enhance the role of the SBV in managing and monitoring the money market, thereby facilitating the money market to become a short-term trading channel and a secondary reserve source as well as an effective communication channel of the SBV monetary policy management to the market.
- The SBV Governor, on behalf of the Vietnamese Government, joined the Acting Country Director of the World Bank (WB) in Vietnam in signing the WB-funded Financing Agreement and the related legal documents of the Ninth Poverty Reduction Support Credit (PRSC 9). It is the fourth one in the second PRSC cycle (PRSCs 6-10) aimed at supporting the implementation of the five year (2006-10) Socio-Economic Development Plan (SEDP). The two sides also signed the financing agreement and related legal documents of the Vietnamese – German University (VGU) Project worth USD 180.4 million.
II. Credit and Monetary development
1. Interest rate:
The common mobilizing and lending rates in VND tended to be stable. The mobilizing rates ranged between 10.6% - 11.2% p.a. The lending rates of short terms for priority areas were commonly quoted at 12-12.5% p.a by the state –owned commercial banks, and at 12.5%-13.5% p.a by the joint-stock commercial banks. The other lending rates were at 13% -15% p.a. The lending rates for securities trading and personal loans were commonly at 16% - 20% p.a.
The USD mobilizing and lending rates were comparatively stable as compared to the previous month.
2. Exchange rate:
In early August, the VND/USD exchange rate in the parallel market remarkably increased, much higher than that quoted by commercial banks. Following the SBV adjustment of the average VND/USD interbank exchange rate to 18,932 (On August 18, 2010), the foreign currency supply and demand became balanced. The VND/USD exchange rate in the parallel market was down and remained at 19,480-19,520. Commercial banks quoted the exchange rates at 19,475-19,500 VND/USD.
3. Fund mobilization
The total deposits at credit institutions was estimated to increase by 17.75% as compared to end 2009
4. Credit to the economy:
Credit to the economy was estimated to increase by 16.27% as compared to end 2009.
5. Total liquidity:
The total liquidity was estimated to increase by 16.31% in comparison with end 2009; of which the cash in circulation rose by 8.37%.
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