Low-interest bank loans expected at end of the year

22-Aug-2017 Intellasia | Vietnamnet | 6:00 AM Print This Post

Analysts believe that banks at end of the year will ease interest rates, which will make loans more accessible for businesses.

A report from NFSC showed that by the end of July 2017, the outstanding loans had increased by 9.3 percent compared with the end of 2016. The figure had been 8.8 percent by the end of July 2016.

NFSC noted a downward tendency in the medium- and long-term credit. While medium- and long-term outstanding loans accounted for 53.9 percent of total outstanding loans (it was 55.1 percent at the end of 2016), short-term outstanding loans amounted to 46.1 percent (44.9 percent).

dong credit made up 91.7 percent of total credit, while the loans in foreign currencies amounted to 8.3 percent.

The report pointed out that the liquidity of the banking system was high in July which could be seen in the interbank interest rates which decreased by 0.6-1 percent compared with the end of June and by 3-4 percent compared with the beginning of the year. The transactions through OMO (open market operation) remained at a low level, while there were nearly no transactions in the first half of July. The State Bank withdrew VND37 trillion from circulation in July and VND48.632 trillion through OMO this year.

The high liquidity is attributed to the fact that the State Bank has bought a large amount of foreign currencies to increase forex reserves, a move that led to the increase of dong in circulation.

Thoi Bao Kinh Te Sai Gon reported that right after the State Bank pumped money into circulation, the overnight interest rate in the interbank market dropped to 0.45 percent, the lowest level in the last 10 months.

The newspaper quoted bankers as predicting that if the money continues flowing into circulation, the overnight interest rate would continue to decrease, possibly to 0.1-0.2 percent as seen in 2016.

The move of the central bank to pump money into circulation followed the prime minister’s instruction to increase the credit growth rate limit to 20 percent instead of 18 percent as initially planned.

The State Bank said the credit growth rate had reached 10 percent by July end. This means that credit would grow my 10 percent more in the last months of the year, or 2 percent a month, and VND110 trillion will be pumped into the economy.

The lending interest rate began to fall, after the central bank eased the regulatory interest rates and the ceiling interest rates for some privileged sectors. Though the ceiling interest rate is now 6.5 percent, some banks are offering only 6 percent per annum.

http://english.vietnamnet.vn/fms/business/184861/low-interest-bank-loans-expected-at-end of the year.html


Category: Economy

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