Capital projected to grow more than 19 percent in 2018

15:35 | 23/03/2018 Finance - Banking

(VEN) - A gap has opened up between deposit interest rates offered by different categories of banks due to differences in their liquidity, cash demand and status.

capital projected to grow more than 19 percent in 2018

Regarding the system of credit institutions, the liquidity was relatively stable in 2017. Capital raising of credit institutions increased 16.9 percent, while credit growth reached 19.3 percent.

In the beginning of 2018, the liquidity remained stable although some commercial banks adjusted their deposit interest rates. Vietcombank is offering interest rates of 4.1 percent per year for one and two-month deposits, down 0.1 percentage points from the previous rate, while BIDV is giving interest rates of 4.3-4.8 percent per year for one and three-month deposits. Other banks like Agribank and Vietinbank are also applying deposit interest rates around this level.

In contrast to state-owned commercial banks, joint-stock commercial banks are raising their deposit interest rates. VPBank is applying interest rates of 7.7 percent per year for six-month deposits, an increase of 0.6 percentage points compared to the previous list. The National Commercial Bank (NCB) and the Orient Commercial Joint Stock Bank (OCB) have also increased their deposit interest rates by 0.15-0.5 percent per year.

According to the National Financial Supervisory Commission (NFSC), by the end of 2018 the financial system’s capital supply for the economy will grow by 19.3 percent compared to the end of 2017, including an increase of 22.5 percent from the capital market and 17.5 percent from credit institutions. Vietnamese dong deposit and lending interest rates in 2018 are forecast to be stable. Interest rates may fluctuate slightly and locally because of seasonality factors at the beginning of the year due to the Lunar New Year, and the end of the year due to increasing credit demand.

According to economists, an increase in deposit interest rates in some joint-stock commercial banks is only seasonal. The increase is not high and only applied at certain times to ensure liquidity.

The State Bank of Vietnam (SBV) has offered treasury bills worth VND15 trillion after the Lunar New Year holidays. The term of the bills also extends to 14 days. This is a management tool to absorb money back. Commercial banks immediately bought T-bills with VND14 trillion. In addition, in the interbank market, the average VND interest rate has also fallen sharply. Market movements show stable liquidity, and reflect the temporary nature of the interest rate fluctuations in certain banks.

According to a SBV survey released recently, the business performance of commercial banks is forecast to continue its upward trend this year after making significant improvements last year. The survey also indicates that many banks expect better results in the first quarter of the year compared to the last quarter of the previous year, and hope for a better business performance for the entire year.

According to the SBV, total bank liquidity is targeted to increase by 16 percent in 2018, and credit to increase by 17 percent, with certain adjustment dependent on developments.

Gia Huy