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Banking & Finance

Q1 2.81% credit growth highest in six years

Released at: 09:27, 30/03/2017

Q1 2.81% credit growth highest in six years

Photo: Viet Tuan

Credit growth higher than mobilization as at March 20.

by Duy Anh

Credit growth of 2.81 per cent during the first quarter of 2017 was a six-year high, figures from the General Statistics Office reveal.

As at March 20, credit growth had surpassed capital mobilization growth. According to the GSO, the ability of enterprises to absorb capital has been relatively good and interest income for banks has improved.

The mobilization interest rate has been relatively stable, at 0.8 to 1 per cent per annum for demand and one-month term deposits and 6.4 to 7.2 per cent per annum for terms of more than 12 months.

Common lending rates for priority sectors stood at around 6 to 7 per cent per annum, while the short-term lending rate was 6.8 to 9 per cent per annum for common manufacturing sectors and 9.3 to 11 per cent for mid- and long-term loans. For customers with transparent financial performance, short-term lending rates are 4 to 5 per cent per annum.

A number of commercial banks have recently raised their deposit rates, with the long-term rate for individual customers via the issue of certificates of deposit to be as high as 9.2 per cent per annum. The State Bank of Vietnam believes these adjustments are perfectly normal and that liquidity in the banking system at the moment remains healthy.

A GSO survey showed that 33.7 per cent of enterprises in the industrial sector viewed their business performance in the first quarter as being better than in the previous quarter, while half expected their business performances to be better during the second quarter.

Only 34.5 per cent of respondents met financial difficulties during the January-March period, while 27 per cent claimed that the lending interest rate was still high.

Vietnam’s economy expanded less than anticipated in the first quarter as trade data indicated export growth slowed more than expected in March.

GDP grew 5.1 per cent in the first three months of 2017, markedly short of the median estimate from economists surveyed by Bloomberg, who predicted year-on-year growth of 6.25 per cent.

Growth was the slowest since the first quarter of 2014 and well short of the 6.21 per cent recorded for 2016 as a whole. The Asian Development Bank has forecast Vietnam’s GDP to rise 6.3 per cent in 2017.

New inflation data also points to softer price growth, with the country’s CPI registering a rise of 4.65 per cent in March, down from 5.02 per cent in February and less than the median forecast of 6.25 per cent.

Vietnam is targeting credit growth in 2017 to expand at the same rate as last year, at 18 per cent, while money supply this year is targeted to grow 16 to 18 per cent against the end of 2016.

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