Weekly information on banking activities (Feb 19 – 25, 2011)

1. Mobilizing and lending rates:

- The VND interest rates:

+ The mobilizing rates in VND changed slightly as compared to the previous week, and were commonly quoted at 13.5% - 14% p.a. Several commercial banks, namely the Vietnam Bank for Agricultural and Rural Development, the Petroleum Joint-Stock Commercial Bank, and the Maritime Joint-Stock Commercial Bank launched promotion programs.

+ The lending rates were commonly 14.5% p.a for agricultural and rural development and exporters, 16 - 18% p.a for other productive and business enterprises, and 18 - 20% p.a for the non-productive sector.

- The USD interest rates:

+ The mobilizing rates quoted by the group of state-owned commercial banks increased by 0.3 - 0.5 percentage points p.a, equivalent to those quoted by the group of  joint-stock commercial banks. The common mobilizing rates were 0.2 - 0.5% p.a for demand deposits, 4.2 - 5.8% p.a for below 12- month deposits, and 4.5 - 6.0% p.a for over 12 - month deposits.

+ The lending rates changed slightly and were commonly 6 - 6.6% p.a for short terms, and 7-8% p.a for medium and long terms.

The specific mobilizing and lending rates were as follows:

2. Transactions turnover :

According to the express reports of commercial banks by February 23, the total amount of transactions in the inter-bank market reached about VND 142,995 billion and USD 2,532 million, i.e. VND 20,599 billion and USD 506 million per day averagely. 

Most transactions in VND were overnight terms that accounted for 52% of the total amount of VND transactions; however, transactions were allocated evenly for 1 week, 2 week and 1 month terms. Transactions in USD was mainly overnight with an amount of USD 1,477 million, accounting for 58% of the total amount of USD transactions.

3. The average inter- bank interest rates:

The interest rates by February 23 were as follows:

- For the rates in VND, the average VND inter-bank interest rates were on a downward trend for most terms and declined by 0.03 - 0.41 percentage points p.a. Only the average VND inter-bank interest rates for 2 week and 12 month terms increased by 0.43 and 0.01 percentage points respectively as compared to the previous week; the average rate for 6 month term was unchanged.

The average overnight interest rate continued to decrease by 0.41 percentage point to 10.89%. The rates for over 2 week terms ranged between 13% and 13.5%.

- For the rates in USD, the average interest rates in USD for below 3 month terms were on a downward trend as compared to the previous week and declined commonly by 0.33 - 0.84 percentage points, of which the rate for 3 month term registered the most remarkable decrease, down to 1.77% from 2.61% (Down by 0.84 percentage point); the average overnight rate and the rate for 1 month were unchanged. The rates for 6 and 12 month terms increased by 0.37 and 3.11 percentage points respectively. The average overnight rate was 0.48% p.a; the rates for other terms ranged between 0.61% - 3.91% p.a. 

There was no transaction in USD for demand loans; the amount of transactions in USD for 12 month term was small.

The average interest rates in the inter-bank market were as follows (% p.a.):

4. Exchange rate   

In response to Resolution No.11/NQ-CP of the Government dated February 24, 2011 on key solutions to control inflation, stabilize macro-economy, and secure social protection, the SBV required credit institutions with forex service license to report the balances of the accounts in foreign currencies of state-owned economic groups and general corporations.

Together with the previous measures taken by SBV on the adjustment of the inter-bank average exchange rate and trading band, generally, commercial banks, enterprises and the public highly valued this action and recognized this policy change as a decisive measure to improve the liquidity of the forex market, hence contributing to limiting operational risks of enterprises and credit institutions and increasing the flexibility of the market.

The VND/USD rates were commonly quoted by commercial banks at 20,870-20,880.

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