Weekly information on banking operations (July 10 - 14, 2017)
1. Mobilizing and lending rates:
On July 7th, 2017, SBV Governor issued Decision No.1424/QĐ-NHNN on reducing by 0.25 percentage points for official interest rates including annual refinancing rate (from 6.5%p.a to 6.25%p.a), rediscount rate (form 4.5%p.a to 4.25%p.a), overnight electronic interbank rate and rate of loans to offset capital shortage in clearance between the SBV and credit institutions (from 7.5%p.a to 7.25% p.a).
On the same day, Governor issued Decision No.1425/QĐ-NHNN on reducing maximum short-term interest rate for loans in VND provided by credit institutions by 0.5 percentage points applied to some sectors and industries as stipulated in Circular No.39/2016/TT-NHNN dated December 30, 2016. Accordingly, maximum short-term interest rate will be reduced from 7% p.a to 6.5% p.a for loans in VND provided by credit institutions to meet the capital demand of agricultural production and rural areas, export, supporting industry, SMEs, and high tech enterprises. Concurrently, the Governor instructed credit institutions, foreign bank branches to balance the mobilizing and lending resources to ensure the liquidity, save operational cost, improve business effectiveness to reduce lending rates applied to priority fields, production and business.
1.1. Mobilizing rates:
- VND mobilizing rates: The rates were commonly 0.8 - 1% p.a for demand and below 1-month terms, 4.5 - 5.4% p.a for 1 to 6 month terms, 5.4 - 6.5% p.a for 6 to below 12 month terms; and 6.4 – 7.2% p.a for 12 month plus term.
- USD mobilizing rates: The USD mobilizing rates were commonly 0% p.a for individuals and economic institutions.
1.2. Lending rates:
VND lending rates: Right after the Decision on reducing interest rate came in to effect, commercial banks have cut rate by 0.5 percentage points p.a for short term lending for priority fields from July 10, 2017. In addition, several commercial banks started to reduce lending rates via a number of programs to support enterprises with preferential rates that are below than the ceiling rates set by the SBV, in combination with reducing rates for medium and long terms loans for priority fields.
Currently, the average rates were commonly 6-6.5% p.a for short-term loans in priority fields, while state-owned commercial banks offerred rates of 9 – 10% p.a for medium and long-term loans in priority fields. The rates were commonly 6.8% - 9.0% p.a for short-terms, and 9.3% – 11.0% p.a for medium- and long-term ordinary loans. The lending rate for short-term loans was 4-5% p.a, applicable to those customers who have good loan-repayment track records, as well as strong and transparent finances.
- USD lending rates were commonly 2.8% – 6.0% p.a. The rates were 2.8 – 4.7% p.a for short-term and 4.7 – 6.0% p.a for medium- and long-term loans.
The specific lending rates were as follows:
Groups of commercial banks |
Currency |
Short term (% p.a) |
Medium and long terms (% p.a) |
Group of state-owned commercial banks |
- VND applicable to ordinary loans |
6.8-8.5 |
9.3-10.3 |
- VND applicable to loans for 5 priority sectors |
6.0-6.5 |
9.0-10.0 |
|
|
USD |
2.8-4.2 |
4.7-6.0 |
Group of joint stock commercial banks |
- VND applicable to ordinary loans |
7.8-9.0 |
10.0-11.0 |
- VND applicable to loans for 5 priority sectors |
6.5 |
10.0-10.5 |
|
|
USD |
4.0-4.7 |
5.0-6.0 |
2. Inter-bank transaction turnover:
2.1. Transactions:
According to reports from credit institutions and foreign bank branches, the total amount of transactions on the inter-bank market reached about VND 160,871 billion while the USD amount was equivalent to VND 72,326 billion.
Most VND transactions were overnight and 1 week terms (accounting for 39% and 38% of the total amount of VND transactions respectively). Transactions in USD were mostly overnight and 1 week terms, accounting for 61% and 22% of the total amount of USD transactions respectively.
2.2. The average inter-bank interest rates:
For VND transactions: The average inter-bank interest rates for below 1 month terms were on downward trend as compared to the previous week. Specifically, the inter-bank interest rates for overnight, 1-week and 1-month terms decreased to 1.53% p.a, 1.65% p.a and 2.71% p.a respectively.
For USD transactions: The average inter-bank interest rates of below 1 month terms were on upaward and downward trends as compared to the previous week. Specifically, the inter-bank interest rate for overnight term was relatively stable at 1.26% p.a, the rate for 1 week term slightly reduced to 1.33% p.a and the rate for 1 month terms insignificantly increased to 1.66%.
The specific average inter-bank interest rates were as follows:
Term |
Over night |
1 week |
2 weeks |
1 month |
3 months |
6 months |
9 months |
VND |
1.53 |
1.65 |
2.00 |
2.71 |
3.79 |
4.50 |
- |
USD |
1.26 |
1.33 |
1.46 |
1.66 |
1.84 |
2.26 |
- |
3. Forex market:
The buying and selling VND/USD exchange rate quoted by Vietcombank at the end of the day were on the downward trend at 22,720/22,790 VND/USD in the first day of the week reduced to 22,690/22,760 VND/USD in the last day of the week (reducing by 20 VND/USD for buying and 30 VND/USD for selling prices as compared to the final trading day of the previous week).
The SBV will continue to conduct synchronous measures and utilize monetary policy tools to stabilize the forex market and foreign-exchange rates within the set band.
The State Bank of Vietnam
Translated by Mai Huong