Vietnam’s banking system reveals indicators of cash surplus | Enterprise

Hanoi (VNS/VNA) – Vietnam’s banking system is
displaying indicators of returning to a interval of cash surplus as no financial institution wants
the State Financial institution of Vietnam‘s (SBV) capital within the open market operation
(OMO) channel and in a single day interbank rates of interest have dropped sharply.

Although the SBV has supplied cheaper rates of interest with longer-term
loans within the OMO channel, no banks have taken half within the SBV’s gives. April
3 marked the tenth consecutive session that the SBV did not
lend capital on the OMO channel.

The transfer came about after the SBV determined to cut back a number of coverage
rates of interest by 0.3 – 0.5 proportion factors from the start of
final week.

Beforehand, the SBV additionally elevated the time period for loans within the OMO
channel from seven and 14 days to twenty-eight days after lowering some coverage curiosity
charges on March 15.

The truth that banks will not be within the SBV’s lending
channel is comprehensible because the rates of interest for the SBV’s loans within the OMO
channel have decreased however are nonetheless increased than these within the
interbank market. Subsequently, as an alternative of trying to SBV loans that
have the next capital value, banks are prioritising borrowing from one another to
meet their liquidity wants.

In keeping with the SBV, the typical in a single day interbank lending
rate of interest fell to 1.12% on March 20. Although the speed inched up in comparison with
the earlier two periods, it was the bottom in a single day rate of interest because the
center of July 2022 and was equal to the speed within the ‘low cost cash’ interval
from the start of 2020 to the center of 2022.

Equally, rates of interest for one-week, two-week and one-month
loans within the interbank market have been additionally on the lowest degree prior to now eight

Interbank rates of interest repeatedly fell within the second half
of March because the liquidity of the banking system grew to become extra considerable than in
the earlier interval. In truth, in latest statements, SBV leaders have
affirmed that the liquidity of the banking system was very considerable when the
SBV purchased a considerable amount of US {dollars} and pushed a corresponding quantity of Vietnamese dong into circulation.

In keeping with SBV Governor Nguyen Thi Hong, within the first quarter
of 2023, the SBV purchased 4 billion USD, which meant injecting a corresponding
amount of money into the market. The injection has helped the liquidity of the
banking system stay considerable.

As well as, Hong mentioned, deposits within the banking system have additionally
risen sharply since Lunar New Yr.

Business banks have lowered their deposit charges additional since
the SBV’s newest price cuts got here into impact on April 3. Vietnam’s large 4
State-owned business banks lowered their deposit charges by 0.1-0.3 proportion
factors per 12 months. Accordingly, rates of interest for deposits from one to 11 months
vary from 4.9% to five.8% per 12 months, and the charges for deposits of 12 months and longer
are set at 7.2%.

At a latest press convention on reviewing banking actions in
the primary quarter of 2023, Pham Chi Quang, Director of the SBV’s Financial
Coverage Division, additionally mentioned liquidity within the banking system is at a big

“Financial institution liquidity is in extra. That is demonstrated by two
indicators. First, the deposit stability of credit score establishments on the SBV far
exceeds the required reserve degree and this motion has occurred since
February this 12 months. Second, the interbank rate of interest dropped very sharply,
at present the in a single day rate of interest is simply about 0.7-1.2% per
12 months,” Quang mentioned.

Quang attributed the surplus liquidity within the banking system to low
credit score development within the first quarter of 2023 that didn’t meet expectations.

In keeping with an SBV report, credit score of the entire economic system in
the primary quarter of 2023 elevated by solely 2.06% in comparison with the tip of 2022,
the bottom rise prior to now three years. With this development, the entire
banking system web lent to the economic system solely about 245.6 trillion VND within the
first quarter of this 12 months.

“It can’t be mentioned that banks don’t need excessive credit score development,
however credit score demand of the economic system may be very low, making it troublesome for banks to
lend,” Quang defined.

In keeping with the SBV’s Deputy Governor Dao Minh Tu, credit score development
of two.06 % within the first quarter of 2023 didn’t meet expectations as a consequence of varied
causes. Particularly, within the first quarter of this 12 months, uncertainties within the
home and worldwide markets had a considerably opposed affect on corporations
and lots of of them confronted difficulties, which induced credit score demand to sluggish.
As well as, credit score development was low within the first quarter so some tasks and
funding actions have been interrupted by the Lunar New Yr vacation.

Usually, credit score development at the start of the 12 months is decrease than
in different quarters. Nevertheless, it’s crucial to repeatedly
watch indicators to evaluate the difficulties of corporations and financial
sectors to well timed take measures, Tu famous./.

Related Articles


Please enter your comment!
Please enter your name here

Latest Articles