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Bank credit up 3.34% in quarter   2010-04-04 - Viet Nam News

 

 The nation's banking system saw credit growth of 3.34 per cent credit in the first quarter, the State Bank of Viet Nam announced yesterday – placing the official figure at a much higher level than the Ministry of Planning and Investment estimate of 2.95 per cent released on Wednesday.

The growth rate came despite high interest rates on loans denominated in Viet Nam dong, currently ranging at 16-20 per cent per year at most banks since the State Bank recently deregulated interest rates on medium- and long-term loans.

State Bank Governor Nguyen Van Giau told reporters yesterday in Ha Noi that the central bank would support commercial banks with more capital in order to keep interest rates in check and reduce the pressure of high interest costs on inflation.

"Some people criticised me because the central bank had not injected enough money into the market, creating a situation of low liquidity and slow economic growth in the first quarter," Giau said.

In late 2009, during a liquidity crisis in the commercial banking system, the State social insurance fund disbursed VND60 trillion (US$3.15 billion), and, in early 2010, the central bank loaned another VND70 trillion ($3.68 billion) to commercial banks.

"If the central bank had pumped in more capital, inflation in the first quarter would have exceeded 4.12 per cent," Giau said. "The State Bank will carry out measures to hold the line on negotiated interest rates in accordance with the market system in order to control inflation at less than 7 per cent and achieve a growth rate of 6.5 per cent."

Total deposits at commercial banks grew by 3.8 per cent during the first quarter, although deposits by individuals grew by a more impressive 9.2 per cent during the period, Giau also noted yesterday.

Foreign exchange rates also stabilised during the quarter, he said, praising the efforts of State-owned enterprises and banks to improve dollar liquidity. One US dollar was currently trading stably at around VND19,000, he said.

Meanwhile, the central bank was considering a suspension on further lending in gold due to the high risks involved, Giau said.


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