Vietnam Currency Discussion Board

[buckets]

Vietnam money: banks cut short-term rates on ample dong


Vietnamese banks have reduced short-term interest rates in the past week due to a surplus of dong in the banking system, bankers said on Monday.

Bankers at four state-run banks, the country's key lenders, said rates on overnight Vietnamese dong loans stood at 4.3-4.5 percent on Monday, down from a range of 4.5-5 percent a week ago.

Rates on six-month dong loans ranged between 7.7-8 percent from 7.8-8.0 percent last week.

Bankers said commercial banks were lending less than their deposits this year, leading to a surplus in the banking system.

Bank deposits at the end of March rose 7.3 percent from end-December 2006, while loans as of March 31 were 2.3 percent higher than end-December, the Planning and Investment Ministry said in its quarterly report to the government last week.

It said January to March corporate deposits were 11.4 percent higher than at the end of 2006, compared with a rise of just 1.05 percent during the same period last year. Deposits by individuals rose 6.6 percent, half the growth of a year earlier.

Bankers said more companies especially large state-owned corporations such as shipbuilder Vinashin and dominant utility EVN, traditionally state-run banks' key borrowers, have gradually switched to bonds to raise funds instead of bank loans which are usually a lot more expensive.

Corporate loans carry annual coupons of around 9 percent while interest rates on bank loans could be as much as 12-15 percent.

Vietnam's five state-run commercial banks control more than 70 percent of market lending.

On the dollar front, the central bank has been keeping the exchange rate little changed.

On Monday, the rate stood at VND16,119 per dollar for interbank market transactions, a decline of just 0.09 percent from the end of 2006.
http://www.thanhniennews.com/business/?catid=2&newsid=27391