VietNamNet Bridge – The statistics released recently show many
paradoxes in the finance & banking market.
The State Bank of Vietnam has
unexpectedly resumed its sale of notes to commercial banks after four months of
interruption.
The noteworthy thing is that
though the note interest rates have been decreasing continuously, especially
short term notes (28 days), the sales have been very high, which shows that the
cash has been running from commercial banks to the State Bank.
Analysts have predicted that a
big volume of more notes would be sold on the market in order to attract money
from commercial banks, which would serve the implementation of the plan to curb
the inflation rate at the one digit level.
The fact that state bank notes
have been selling well and that commercial banks have been the main buyers,
makes people think that commercial banks now have excessive capital and that
banks’ liquidity has been very good.
If so, banks may think of
slashing the lending interest rates to make it easier for businesses to access
bank loans, which would rescue a lot of businesses now in thirst for capital.
However, this is not true that
commercial banks all have profuse capital and that the interest rates would be
eased.
In the interbank market--the
interest rates, overnight, one week and one month interest rates, have all been
on the rise. There are two groups of banks existing, including the one with
strong liquidity and the other, comprising of small banks, which are facing
serious liquidity.
The small banks have been trying
to improve liquidity by borrowing money on the interbank market at high
interest rates and pushing up the capital mobilization from the public.
Doanh Nhan Saigon has reported
that small banks now reportedly have to borrow 6-monh term loans on the
interbank market at the interest rate of 12 percent per annum. Meanwhile, the
ceiling deposit interest rate at which commercial banks can pay to seek capital
from the public is 9 percent per annum.
In fact, the actual deposit
interest rates banks pay to individual depositors are much higher, than the
ceiling rate of 9 percent set by the State Bank, at 12.5-13 percent per annum.
The interest rate race among
commercial bank always results in the fact that the cash would flow from the
public to the banking system. That explains why the cash flow to commercial
banks has increased by 11 percent in comparison with the same period of 2011.
Meanwhile, the credit growth rate has reached three percent only by the end of
October.
As such, the cash has been going
from the public to commercial banks and then to the State Bank, while it has
not reached out to enterprises to serve their production plans.
Economists said that the national
economy has entered a new phase, when borrowers want to ease the debts;
therefore, the credit has been increasing very slowly. The reports by commercial
banks showed that the banks’ money have been injected in some non-credit
fields, including the government bonds.
Buying government bonds is the
solution chosen by the commercial banks with strong liquidity, because of the
high safety of the securities, even though banks would be able to make higher
profits if lending to businesses.
The money has not been going to
the manufacturing sector simply because of the weak consumption demand.
The enterprises, which can
satisfy the requirements for borrowing money, do not intend to borrow money
right now. The others, which have found good business opportunities, cannot get
new loans once they have not paid the old debts. Meanwhile, the businesses with
a healthy financial situation only want to pay debts and do not plan to scale
up production at this moment.
DNSG
Business & Investment Opportunities
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