Credit growth in Jan-February rises 1.4pct
During the first two months of this year, total payment posted a rise of 1.39 percent against the end of 2009, total deposits dropped 0.17 percent as deposits of economic institutions slipped 5.94 percent while deposits of individual depositors jumped 5.57 percent, reported the State Bank of Vietnam (SBV).
Credit growth was estimated to increase by 1.4 percent, equalling to the level of the same period of recent years (in Jan-February of 2006 it was at -1.45 percent whereas it rose 2.09 percent in 2007 and 1.82 percent in 2009).
In February alone, credit growth of banking system was 1.14 percent, marking the highest level during past thee months while it was only 0.26 percent in January and 0.72 percent in last December.
In 2010, credit growth is expected to increase by 25 percent. In 2009, it was 37.73 percent.
Relating to credit quality of banking system, the central bank said that by the end of 2009, bad debt ratio was 2.03 percent and it was 2.09 percent till the end of February.
In the forthcoming time, the central bank will give flexible interest rate management in accordance with the market regulations.
In the press conference held on March 3, Le Duc Thuy, SBV’s former governor cum chair of National Financial Supervisory Committee, said that in Jan-Feb, the economy was still on the good recovery impetus. However, the export activities saw low growth with only 0.1 percent in Jan-February and trade deficit remained high at 19.6 percent.
Thuy forecasts that 2010′s credit growth would be only 12-15 percent or highest at 20 percent. Thus, the goal of controlling credit growth at 25 percent will be feasible and ensure for economic growth at 6.5 percent as planned.
Important information released in the press conference was that whether state budget could borrow capital from the central bank via selling short term government bonds as an advanced loan so as not to put pressure on monetary market.
“Borrowing with short term will not affect the total money supply of the year. Otherwise, these short term loans would be able to pay for advances from State Treasury and insurances for organisations while these organisations still send money at banks. Therefore, deposits at banks will be more plentiful and capital mobilisation would be not very difficult” said Thuy.
Thuy added in fact, deposit rate is higher than 10.5 percent per year and lending rate exceeds 12 percent per year. So, offering a “forced” interest rate will be illogical on both deposit and lending rate.
Recently, prime minister as well as central bank allowed applying negotiation lending rate for medium and long term loans. At present, SBV is studying on applying this policy for short term loans and seeking methods to remove the ceiling deposit rate of 10.5 percent/year.
Category: Finance
