VietNamNet
Bridge – Instead of pushing up lending,
commercial banks have spent money to buy government bonds, accepting the low
government bond interest rates.
Though
the lending interest rates have been lowered to 15 percent per annum, and
though banks really want to push up lending to “liberalize” their excessive
capital, the outstanding loan growth rate remains modest.
Late
last week, 7 trillion dong worth of government bonds was successfully sold at
the Hanoi Stock Exchange. Three trillion dong worth of 3-year bonds had the
interest rate of 9.15 percent per annum, another 3 trillion dong worth of
5-year bonds were sold at the interest rate of 9.45 percent per annum, and the
1 trillion dong worth of 2-year bonds were sold at 8.95 percent.
The
interest rates all were lower by 0.25 percent, 1.03 percent and 1.4 percent,
respectively, than the rates of the last bidding.
Especially,
the interest rates are even lower than the interest rates banks have to pay to
depositors when mobilizing capital from the public. Many banks have announced
the ceiling lending interest rate of 15 percent per annum, but the rates are
only applied to some subjects.
For
example, from May 10 to July 9, 2012, import-export companies can access the
dong preferential capital at the interest rate of 14 percent per annum, and
dollar capital at 4 percent per annum at Lien Viet Post Bank.
Meanwhile,
Agribank has adjusted its short term loan interest rates, which are calculated
by the dong deposit interest rates (1 month and longer terms) plus 3 percent at
maximum applied to the agriculture and rural development sector, and to small
and medium enterprises.
The
problem now is that banks accept to buy government bonds, despite the low
interest rates which bring loss, instead of pushing up lending, despite the
higher interest rates.
Analysts
say banks would rather seek lower profit by buying bonds than expanding credit
because of the fear for risks. Banks would only pump money to save the
businesses which are meeting temporary difficulties, while they would not give
money just to extend the enterprises’ life by some more months.
Banks
have also tightened the requirements on borrowers, which means that fewer
enterprises would enjoy the preferential loans.
Meanwhile,
Nguyen Hong Long, a senior executive of Techcombank, said that if banks
consider bonds as long term investment deals, not short term investment deals
like deposits; one could not say banks would take loss with the investments in
the bonds.
The
current bond interest rate is 11 percent, but if the rate of interests drops to
8 percent, this means that banks would make a profit of 3 percent. On the
interbank market, transactions are made with the interest rates of 3-4 percent
per annum only. Therefore, if having capital in excess, banks still have to buy
bonds.
The
fact that banks pour money into bonds shows that banks have capital in excess.
Banks have not expanded credit not because they do not want to lend to
businesses, but because there are very few clients who can satisfy the
requirements set by the banks to be eligible for borrowing money.
An
analyst has said the current good liquidity situation is just temporary, since
the State Bank has pushed up the purchase of foreign currencies to increase the
foreign currency reserves, for which it has pumped dong into circulation.
Phan
Hong Hai, Deputy General Director of HSBC Vietnam, also said that the capital
has got stuck because of the low demand for loans in the context of the
economic difficulties; therefore, banks have to put their idle capital into
bonds.
Source:
TBKTVN
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