Credit growth hits 1% in January

HA NOI — The nation's banking system reported credit growth of 1 per cent in January, a good sign for achieving the target of 25 per cent growth this year while still considered reasonable in terms of seasonal production cycles and demand for capital, the State Bank of Viet Nam announced yesterday.

"Before lunar New Year, companies often focus on summarising business results and planning for the new year," said State Bank deputy governor Nguyen Dong Tien. "They will gear up production after the holiday festivities."

The increase in credit growth for January was therefore not low in comparison with previous years, Tien said. The rate of growth was 0.65 per cent in January 2009 and 0.9 per cent in January 2008, while credit growth actually slowed by 1 per cent in January 2007.

In the last week of this past month, average interbank rates for loans in Vietnamese dong increased by 0.6-2 percentage points over the previous week to 11.12-12.52 per cent.

The central bank was aiming for an ideal rate of about 9 per cent, Tien said.

Interbank transactions last week totalled VND86.66 trillion (US$4.25 billion) and $1.57 billion, up 10.13 per cent and 3.97 per cent against the previous week, respectively.

The average overnight lending rate, meanwhile, was 9.67 per cent, moving between a high 14.5 per cent and a low of 6.8 per cent during the month.

Interest rates for deposits in Vietnamese dong remained stable at 10-10.49 per cent at private banks and 8-9 per cent at State-owned banks. Most private banks were offering promotions and gifts to attract available capital.

In an attempt to make more capital available for small- and medium-d enterprises, Tien said that the central bank had applied a series of measures via Open Market Operations and refinancing to credit institutions. The State Bank had refinanced VND10 trillion ($540.54 million) for Agribank to make capital available for lending in the farming sector. — VNS