Cbank slashes key interest rates by 1pct
Friday, May 10, 2013, 16:00 GMT+7
The State Bank of Vietnam (SBV) has decided to cut key interest rates by 1 percentage point starting May 10, 2013.
Accordingly, the refinancing rate, discounted rate, and overnight rate for electronic interbank lending/transaction will be cut by 1 percentage point to 7 percent per annum, 5 percent per annum and 8 percent per annum.
Meanwhile, the SBV has also issued Circular No. 10 prescribing maximum short-term lending rate of credit institutions and foreign bank branches for some prioritized economic areas including support industry, rural-agriculture, and small and medium enterprises.
Accordingly, short-term interest rates in Vietnam dong fell from 11 percent per annum to 10 percent per annum, while the micro-finance institutions and credit funds rate fell from 12 percent per annum to 11 percent per annum.
Nguyen Thi Hong, Head of Monetary Policy Department under SBV, said the central bank does not lower the dong deposit rate cap with maturity under 12 months due to reduced inflation in March, while the inflation in April did not increase significantly.
According to Hong, the ceiling depositing interest rate of 7.5 percent is now consistent with the inflation target. This is the maximum level, so local credit institutions can adjust the rate in accordance with their business plans.
Accordingly, Agribank lowered the rate for 1-month and 2-month terms to 5 percent and 7 percent per annum, the lowest in the market and lower than the ceiling of 7.5 percent per annum. The rates for 3-9 month terms are at the ceiling rate of 7.5 percent.
The rates for 1-month and 2-month terms in BIDV were reduced to 6 percent and 6.5 percent per annum. At Vietinbank, the term deposit interest rate for less than 12 months was at only 7 percent per annum.
Talking to Tuoi Tre, the leader of a large bank said it had to reduce the depositing interest rate due to capital surplus. Unlike last time, this time the interest rate is fixed and its branches are not allowed to pay extra money to lure depositors.
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Shrinking earnings Banking inspection agency under SBV has just released the official statement on the interests that local banks repaid to the economy in 2012. According to the agency, estimated from data reported by credit institutions, in 2012 the credit institution has to pay VND408 trillion ($19.6 billion) worth of interest on deposits, while they collected some VND420 trillion ($20.16 billion) worth of interest from their borrowers. The earnings in the banking sector in 2012 were the lowest level since 2008 and only accounted for about 40 percent of the 2011 level. This difference is mainly due to the difference in interest rates, lower input costs, increased funding for risk reserves, and lower credit growth rate, said the agency. |
