Vietnam credit growth +0.05%, deposit -0.74% in October, 2011

Total outstanding loans of the whole banking system as of Oct 20 were estimated to rise by 0.05% on-month and up 8.61% from end-2010 while total deposits fell 0.74% on-month, yet rising by 8.59% YoY.

Total outstanding loans of the whole banking system as of Oct 20 were estimated to rise by 0.05% on-month and up 8.61% from end-2010 while total deposits fell 0.74% on-month, yet rising by 8.59% YoY, the State Bank of Vietnam said on its October banking report on Nov 11.

Dong deposits in October slightly fell by 1.29%, while dollar ones inched up by 1.73% on month. Dong and dollar loans in October were both reported to increase by 0.05% from September.

Vietnam’s credit growth rate as of October, 2011 was much below 18-20% official target and represented the lowest credit growth in over a decade.

Obviously since the SBV took measures to strictly enforce interest rate cap at 14% p.a. in September, overall deposits in the banking system have fell 2-3% mainly due to a drop in dong deposits. Experts believed that the decrease in VND deposit rates prompted investors to withdraw their deposits to purchase gold and dollars.

The dong deposit interest rates were mostly close to the rate caps of 6% for under 1-month terms and 14% p.a. for other terms, while lending interest rates were 15-19% for agricultural producers and exporters, 22-25% p.a. for non production and 17-21% p.a. for others.

Dollar deposit interest rates ranged from 2% for individuals and 0.5% for economic organizations. Meanwhile, lending interest rates were mostly 6%-7.5% p.a. for short terms; and 7.5-8% p.a. for medium and long terms.

As of Oct 20, the country’s broadest measure of total money supply, or M2, edged down 0.5% MoM, yet up 7.5% from end-2010. Cash circulation was estimated to rise 1.09% on-month and 0.91% from last year.

In October, the central bank adjusted the interbank dollar exchange rates up 0.77% from September, staying at VND20,788/USD on Oct 27.

Source Sophie/ StoxPlus

Tags: Vietnam banking industry, Vietnam credit growth, Vietnam finance, Vietnam financial