Are banks buying each other’s bonds to increase medium and long-term capital?

16-Aug-2019 Intellasia | Tai chinh Plus | 6:02 AM Print This Post

The capital market report recently published by Saigon Securities Incorporation (SSI) Retail Research stated that in the week from August 5th to 9th, the State Bank of Vietnam (SBV) narrowed the same of bill issuance through which to net pump 11 trillion dong via this channel. The amount of circulated bills declined to 39 trillion dong. There was no transaction on Open Market Operation (OMO) and the OMO in circulation was zero.

The interbank interest rates slightly increased by eight to nine basis points (bps) to 3.08 percent per annum on overnight term and 3.2 percent per annum on one-week term. The dong US dollar interest rate difference was 0.7 percent per annum, slightly up compared to 0.6 percent recorded in the last week.

The mobilisation interest rates on market 1 were stable at 4.1 percent5.5 percent per annum on terms of less than six months, 5.5 percent7.55 percent per annum on terms from six to less than 12 months, 6.4 percenteight percent per annum on terms of 12 months and 13 months. Particularly, some banks with small mobilisation market share applied interest rates of eight to 8.2 percent per annum to terms from nine to 13 months, up by 10-20 bps compared to the previous period.

According to the semi-annual financial statements of 18 listed banks, by the end of June 2019, lending to customers increased by 8.2 percent compared to the end of 2018 while customer deposits only rose up by 7.4 percent. If considering the total mobilisation source (including customer deposits and issuance of valuable papers), the growth in the first six months of 2019 was 8.4 percent.

The total value of issued valuable papers of 18 listed banks as of June 30th 2019 was 340.5 trillion dong, up by 71 trillion dong, equivalent to 21 percent compared to the end of 2018. However, the total bonds of credit institutions held by these banks also increased by 56.5 trillion dong. Thus, according to SSI Retail Research, perhaps commercial banks are buying bonds of each other to increase scale and proportion of medium and long-term capital mobilisation. Thus, the demand for mobilising deposits from customers is still high.


Category: Finance, Vietnam

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