April 28, 2009
HA NOI — The nation’s banks have made about VND254.9 trillion (US$14.4 billion) worth of loans to date at the Government-subsidized interest rate of 4 per cent, according to the State Bank of Viet Nam.
State-owned banks and central credit unions have made the lion’s share of subsidized loans, disbursing VND187.66 trillion ($10.6 billion) under the program to inject funds into the economy and spur production and consumer spending.
Private commercial banks had made VND55.24 trillion ($3.12 billion) worth of loans under the program, while foreign-invested banks and joint venture banks have loaned another VND11.04 trillion ($623.84 million). Finance companies have been responsible for the remaining VND953 billion ($53.84 million).
In a conference held in Ha Noi last week to discuss the subsidized loan program, many commercial banks confirmed that they were quick to approve subsidized loans for eligible customers but they would not loosen lending criteria or increase risk simply to make more loans under the program.
The program was expected to inject another VND165.1 trillion ($9.33 billion) into the economy this year, for a total of VND420 trillion ($23.73 billion).
A number of banks have made great efforts to apply all idle capital toward the lending program, which might explain why the interbank rate on mid to long-term dong loans last week had nudged up by 0.4 per cent. Average overnight rates on the interbank market were 6.13 per cent while longer-term rates ranged from 7 to 8.4 per cent.
Short-term deposits have continued to account for a large portion of commercial banks’ deposit structure, with most deposits for terms of less than six months. Meanwhile, banks are attempting to ensure capital for longer-term lending through 2011.
Banks are therefore offering long-term certificates of deposits or offering promotional rates on longer-term deposits of up to 8.8 per cent per year.
Interest rates offered on three to 12-month dong deposits at State-owned banks and commercial banks last week ranged from 7.1-7.95 per cent.
Cao Si Kiem, vice chairman of the Consulting Committee for National Monetary Policy, said that banks that adjusted their rates on long-term deposits might suffer a loss in the short term but would over time ensure capital supplies to meet customer demand.
Greater transparency from the Government about the status of the economy would help depositors feel more confident about putting their money in banks, Kiem added.
Doan Van Thang, general director of Lien Viet Bank, said commercial banks should mobilize more mid- and long-term sources of capital as the demand for loans at the 4-per-cent interest rate would only increase.
The Prime Minister, back on April 4, encouraged domestic banks to raise interest rates on longer-term deposits to ensure sufficient long-term capital, Thang noted.
Lien Viet Bank, for instance, has already increased rates to 7.4 per cent for six-month deposits, 7.6 per cent for 12-month deposits, and 7.7 per cent for 36-month deposits, Thang said. — VNS