Interest rates down, capital mobilization still up

(Baonghean) - In 2014, credit institutions in the province actively improved service quality, diversified capital mobilization forms, and encouraged businesses and people to open payment accounts through banks. Therefore, although the market interest rate was low, capital mobilization still increased.

Although lower than the growth rate of the previous year (26.4%), by the end of December 2014, the mobilized capital in the province was estimated at 66,901 billion VND, an increase of 10,797 billion VND compared to the beginning of the year, equivalent to 19.2%. In 2014, the State Bank of Vietnam adjusted interest rates twice in March and October. Therefore, the interest rate level was adjusted downward, stimulating credit growth, while contributing to reducing input costs for businesses. The VND interest rate level is commonly at 0.8 - 1%/year for non-term deposits and deposits with terms of less than 1 month; 5 - 6% for deposits with terms from 1 month to less than 6 months; 6-7.5%/year for term deposits from 6 months to less than 12 months, term over 12 months is 7.5-8.3%/year. The maximum USD mobilization interest rate according to the State Bank's regulations applicable to organizations is 0.25%/year, the maximum interest rate applicable to individuals is 1%/year.

Transaction at the Bank for Agriculture and Rural Development, Nghe An Branch.

Although at the end of the year, banks usually compete in interest rates and launch promotional programs to attract capital, but because of production difficulties and slow credit growth, the mobilization interest rate level is generally stable. Before the adjustment of mobilization interest rates, the market showed signs of shifting to long-term deposits to enjoy higher interest rates. Mr. Nguyen Sy Minh - Chief Accountant of SHB Bank, Nghe An branch said: "Currently, many banks are adjusting interest rates in the direction that the longer the term, the higher the interest rate to balance medium and long-term capital sources. Therefore, we encourage customers to make long-term deposits to enjoy higher interest rates. For SHB Bank alone, the total mobilized capital has reached about 1,700 billion VND so far."

At Sacombank Nghe An, we met Ms. Nguyen Thi Hang - a food business owner in Hung Phuc ward. She said, "From trading and saving money, I have saved a small amount of capital to prepare for illness. The interest rate is low, but because the capital is small and I have not invested in other areas, I decided to deposit it in the bank, which is both safe and has a little interest." The leader of the State Bank of Nghe An said: Real estate has not shown any signs of warming up again, gold and foreign currency have not fluctuated, showing signs of stability in a downward trend, USD is strictly controlled... In addition, credit institutions in the area have actively improved the quality of banking services, diversified forms of capital mobilization, encouraged businesses and people to open payment accounts through banks, so capital still flows into banks despite the decrease in interest rates.

In 2015, the banking system strives to achieve a growth rate of mobilized capital in the area from 15 - 20%; credit investment growth rate of about 14 - 18%; bad debt under 3% of total outstanding debt. Banks are closely following the action program to implement the resolution of the 17th Provincial Party Congress and resolutions on developing economic sectors of the province to increase capital mobilization and expand credit investment safely and effectively; Balancing the terms between mobilized capital and focusing on lending capital for production and business costs of the agricultural, rural, export, small and medium enterprises, key projects of the province; lending to poor households and other policy subjects in accordance with the provisions of law...

The consumer price index (CPI) in the last months of the year remained unchanged compared to the previous months and only slightly increased compared to the end of 2013. Due to the impact of falling gasoline prices, it is forecast that the whole year's inflation will only be around 3%. Low inflation indicates that the mobilization interest rate may continue to decrease (because the interest rate is often adjusted based on the rate of inflation control). According to data from the State Bank of Vietnam, Nghe An branch, capital mobilization in 2014 increased by 19.2% but lending increased by 14%, available capital was in excess while other investment channels were not very bright, so the capital flow continued to be stable, without worrying about shifting or lack of resources. The liquidity of credit institutions continued to be guaranteed and abundant, the interbank market operated smoothly...

Currently, many banks have excess resources such as SHB Bank Nghe An branch, which mobilized over VND 1,700 billion and lent over VND 1,028 billion. With excess capital, many banks have solutions to sell capital on the interbank market. However, there is currently a phenomenon of businesses borrowing money from this bank at low interest rates and depositing money in other banks to enjoy higher interest rates that is quietly happening. This is an act of capital appropriation and misuse of capital that needs to be controlled to avoid future risks. The State Bank needs to direct credit institutions and credit institution branches to proactively plan and estimate the additional risk reserve amount that must be set aside when Circular 02/2013/TT-NHNN on asset classification, provision levels, methods of setting aside risk reserves and the use of reserves to handle risks in the operations of credit institutions and foreign bank branches takes effect...

Thu Huyen