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Banks hike interest on dong deposits to raise funds   2009-05-05 - TN, Agencies

 
 
   
Commercial banks have raised interest rates on dong deposits or are offering cash bonuses to mobilize the funds needed to lend under the government's economic stimulus package.

 

Partly private Saigon-Hanoi Bank raised the rates by 0.1 to 0.3 percent for deposits of between two and 24 months on April 27. The Hanoi-based lender pays 8.8 percent for 12-month deposits.

Military Bank, also based in Hanoi, has also increased the rates by 0.2 to 0.4 percent and offers a highest rate of 8.6 percent per year for 60 months.

Ho Chi Minh City-based Eximbank said from Monday it would pay cash bonuses of VND200,000 (US$11) to

VND1 million ($56) to depositors, depending on the deposit term and amount invested.

Maritime Bank launched a campaign on April 20 offering depositors 9.3 percent on 48-month deposits and scratch cards that come with gifts like microwave ovens and orange juicers.

Last month, the government said it would subsidize bank loans to companies and individuals for up to two years - up from the initial eight months - as part of its efforts to stimulate economic growth.

In the first quarter, the economy expanded 3.1 percent, less than half the 7.5 percent pace recorded a year earlier.

Deposit rate hikes would not affect the stability of the banking system thanks to the central bank’s surveillance, Duong Thu Huong, general secretary of the Vietnam Banks Association, said.

On interbank markets, interest rates on loans from overnight to two months rose while rates on loans from three months to one year remained unchanged from a week ago, according to Reuters data.

The overnight lending rate edged up to 6.33 percent from 6.26 percent last Monday, while 12-month loans were unchanged at 8.61 percent.

The State Bank of Vietnam, the central bank, said it would keep its key interest rates unchanged in May, holding the base rate at 7 percent, the discount rate at 5 percent and the refinancing rate at 7 percent.

On the dollar front, fixings on interbank dollar loans eased slightly after Vietnam reported a trade surplus of $800 million in the first four months of the year.

Rates on overnight dollar loans eased to 0.43 percent on Monday from 0.45 percent a week ago, and the six-month lending rate dropped to 2.23 percent from 2.27 percent last Monday.

Loans expand 11 percent

The total outstanding loans at banks have risen 11.16 percent this year, according to a statement posted on the government’s website Monday.

The economy would probably continue to “face difficulties on declining exports and slowing foreign capital inflows” in the coming months, and the central bank would manage monetary policy to “ease it suitably and cautiously,” the central bank’s Governor Nguyen Van Giau said in the statement.

Monetary policy would also be managed to ensure a balance between implementing the government’s stimulus packages and stabilizing prices as well as ensuring the safety of credit institutions, he said.

Commercial banks lent a combined VND255 trillion ($14.3 billion) to businesses as of April 23 under the subsidy program, the central bank said on its website.


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