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Posts Tagged ‘interest’

Interest rates expected to drop in 2011

In Uncategorized on January 12, 2011 at 7:14 am

Interest rates are expected to go down this year because they are presently too high and cannot rise any higher, an economist has said.

Transactions conducted at a Southern Bank branch in Ho Chi Minh City (Photo: SGGP)

This year has seen skyrocketing interest rates due to the soaring inflation in 2010, with savings interest rates and lending interest rates being 14 percent per year and 17-18 percent per year respectively.
 
According to economists, the rates are already too high for enterprises; therefore, it is unlikely that interest rates will go any higher.
 
Enterprises and commercial banks have hoped that the State Bank of Vietnam will regulate interest rates in compliance with the Law on Credit Institutions, which took effect early this year.
 
Banks said that this will give them the flexibility in adjusting interest rates in accordance with foreign exchange rates and inflation.
 
Economists said the interest rates will drop by the end of the first quarter of 2011, because demand for production and business funds from various enterprises will decrease after the Tet holiday.
 
In addition, banks will be able to mobilize funds from residents more easily. This is because the inbound remittance will increase, and people will have more money in cash.
 
Therefore, banks might reduce their lending interest rates to 15-16 percent by the second quarter of 2011.
 
Some commercial banks said they cannot lower the interest rates yet, because the expenses for mobilizing funds are still very high.
 
However, they said they can offer lower rates to their regular client base.
 
The central bank said early this year that it will use the prime interest rate to curb high interest rates, but not as a monetary policy management tool.  
 
The bank will focus its management on refinance, open market operations (OMO) and rediscount rates.
 
The central bank said OMO rates will be flexible and be adjusted to market rates.
 
Deputy general director of a joint stock bank said that to lower interest rates and stabilize the monetary market in 2011, drastic solutions will have to be taken to contain inflation.
 
Economists said there should be a special mechanism concerning small commercial banks.
 
They said for the long run, interest rates for the dong should be floated in the government’s direction. However, in abnormal market conditions, the central bank must regulate market interest rates.
 
The central bank also said that it has targeted credit growth at 23 percent for 2011, two percent lower than last year, and loans will be prioritized for the production sector.

Source: SGGP

Gold deposits hit with income-tax on interest

In Uncategorized on December 16, 2010 at 2:28 pm




Gold deposits hit with income-tax on interest


QĐND – Thursday, December 16, 2010, 21:2 (GMT+7)

Holders of gold certificates issued by commercial banks are required to pay 5-percent personal income tax on interest earned by the certificates, according to a ruling by the State Bank of Vietnam aimed at reducing the level of investment in gold.


Under State Bank Circular No 22, issued in October, banks were forbidden from accepting gold deposits but could offer commercial paper in exchange for gold.


“This kind of business poses huge risks to the banking system due to unpredictable fluctuations in gold prices,” said a senior monetary policy official with the State Bank, who asked to remain anonymous.


“The development of gold deposits and lending among the non-business sector, which the State Bank does not encourage, has also increased the dollarisation of the economy,” he added.


HDBank and VietA Bank have withheld 5 percent of gold certificate interest payments since November to cover the taxes.


“Buying these certificates is seen as an investment channel and the holders have to pay 5 percent personal income tax,” said VietA general director Pham Duy Hung.


HDBank’s general director Nguyen Huu Dang said his bank had paid taxes on gold certificates for customers for years.


Other big gold traders like Eximbank, DongA Bank or ACB have not implied such new policy.


“Collecting personal income tax on gold certificate interest is reasonable. However, we are still confused about how to behave with the interest on certificates of deposit in Vietnamese dong and US dollars,” commented the deputy director of a HCM City-based bank, who asked to have his name withheld.


Current tax regulations state that all interest income on bonds or other commercial paper (except Government bonds) is taxable income.


HCM City Tax Department told Tuoi Tre (Youth) newspaper that interest from gold certificates must be taxed, but it has not yet provided commercial banks with documentary guidelines.


In a proposal sent to the State Bank of Vietnam, the General Tax Department recommended that interest on short- and long-term certificates of deposit be considered interest on savings accounts and be exempted from income tax.


An estimated 92.6 tonnes of gold, worth 4 billion USD, is currently deposited with commercial banks. If the central bank were to limit the banks’ ability to profit from these deposits, a large volume of gold would likely to be unleashed on the market, helping lower prices while easing pressures on the foreign exchange market.


Source: VNA


Source: QDND

State Bank tries to prevent banks from increasing their interest rates

In Uncategorized on December 16, 2010 at 10:04 am

The State Bank of Vietnam has ordered its branches to monitor all other banks that have an interest rate higher than 14 percent a year.

The State Bank is trying to prevent banks increasing interest rates

On Wednesday, Vietnam Technological and Commercial Joint Stock Bank (Techcombank) raised its one month interest rate to 17 percent per year, which will apply from 8-10 December with deposits of more than VND100 million.  As soon as this happen, other joint stock banks, also changed their interest rates to 17.5 and 18 percent a year.


Specifically, the floating interest rate of 36 month deposit of a bank was rebounded up to 18 percent a year, for all deposits over VND5 million.


Ho Huu Hanh, director of the State Bank of Vietnam in Ho Chi Minh City, said he has asked four delegations to investigate the banks about the skyrocketing interest rate.


This discision immediately made some banks reduce their interest rate from 17-18 to 14 percent a year.


An official from Techcombank said, “That it had not increased the interest rate of savings deposit to 17 percent, but it was only a promotional program for those long term customers”.


Furthermore, the State Bank in Hanoi has expressed their disagreement with the rising interest rate, saying it that it gave some banks an unreasonable advantage, which may lead to unfair competition.


Techcombank’s action had lead to a movement of deposits from other banks, forcing them to elevate their interest rates.


Meanwhile, Nguyen Duc Vinh, general director of Techcombank, admitted his bank had not being able to anticipate this affect, and has promised to cancel the program.


After the meeting, thousand of banks, agreed to lower their rate to 14 percent a year.


A spokesperson from the State Bank said, “The inflation rate this year will not exceed 12 percent, so, there is no reason for banks to raise their interest rate to 17-18 percent a year”.


In a related move, the State Bank has pledged to provide loans to smaller banks. All these banks require is to present their credit contracts, to the State Bank, to approve their for loans.


However, a joint stock bank’s leader said, “Some small banks are afraid to borrow capital, because they will be closely monitored by the State Bank, and this will lead to the larger banks raising their interest rates again”.

Source: SGGP

Ceiling interest rate to not exceed 15 percent per year

In Uncategorized on December 16, 2010 at 10:04 am

The ceiling interest rate of commercial banks will be increased from 12% to 15% a year, from this Sunday.

A banking staff directs a customer about lending procedures. Banks agree that ceiling interest rates will not be higher than 15% percent a year (Photo: SGGP)


The decision came from a meeting between the State Bank of Vietnam in Ho Chi Minh City and the Vietnam Banking Association, in collaboration with the commercial banks on Saturday.


A day earlier, the State Bank in Hanoi chaired a meeting, in which 12 northern commercial banks signed a commitment, agreeing that their maximum interest rate would be 14% a year.


In case, the banks give their customers any promotional programs (cash or any other gifts); the real interest rate would not surpass 15% a year. Any bank violating this regulation will suffer severe punishment from the authorized organizations.


Because of the rocketing interests during the last few days, the State Bank intervened to stop any more increases. At one stage, the interest rate was 17% to 18% a year in some commercial banks. However, now the ceiling is lower. In HCMC, it remains at 15.5% to 16.5% a year.


Related article:
State Bank tries to prevent banks from increasing their interest rates

Source: SGGP

Techcombank gets warning for pushing interest rate

In Uncategorized on December 16, 2010 at 10:03 am

The State Bank of Vietnam has warned the Techcombank as the commercial bank increased its deposit interest rates to 17% on Dec. 8-10.

File photo of aTechcombank office

State Bank inspectors issued its warning to Techcombank chairman Ho Hung Anh and chief executive officer Nguyen Duc Vinh on December 13.

An interest rate war was sparked off by Techcombank when it hiked the maximum rate to 17% per year plus a 0.6% bonus, which will apply from 8-10 December with deposits of more than VND100 million. 

As soon as this happened, other joint stock banks, also increase their interest rates to 17.5 and 18 percent a year.

The central bank has blamed Techcombank for arbitrarily hiking the rate, causing disorder in the financial and monetary markets. It ordered the violating banks to ‘roll back’ the hike immediately.

However, some of Techcombank branches have not strictly followed this order and have continued to maintain high interest rates, under several different forms.

Source: SGGP

Big lenders survive interest rate fluctuation

In Uncategorized on December 16, 2010 at 10:02 am

During the interest rates fluctuation period, most of small lenders tended to restrain offering loans to maintain liquidity levels, while big ones made a contrast move.

View at ShinhanVina bank (Photo:Minh Tri)

Do Minh Toan, deputy general director of Asia Commercial Bank, known as ACB, said his lender was well-prepared for the increasing capital demand at yearend, offering loans to many regular clients with reasonable rates even when interest rates started to fluctuate.


“High interest rates often bring down businesses’ earnings. However, this year’s healthy growth of local enterprises helped boost lenders’ credit growth,” said Toan.


ACB offer an interest rate of 15.5 percent per year on short-term deposits and 16-16.5 percent on long-term ones.


“Bank interest rate will remain choppy until the New Year Tet holyday on February. With the holiday coming sooner than previous years, the amount of money flowing on the market after Tet will be abundant. Therefore, I expect the deposit rate on February will be set at a lower rate of 12-14 percent a year,” Toan said.


Techcombank, which is the fifth-largest bank in term of assets, triggered an interest rate race last week when announcing it would offer dong depositor rates as high as 17 percent per year.


Other lenders reacted by pushing their own rates up, some as high as 18 percent.
But these offers were rescinded after the central bank requested them to bring the rates down to prevalent market levels – 14 percent or less.


The Hanoi-based lender then was among the first lenders reducing the deposit rate, offering the rate of 13.45-13.95 percent per annum.


Interbank lending rate also climbing
Expecting the fluctuation in interest rates to cool off in the upcoming time has seen many banks replacing monthly interbank loans with weekly ones.


Big lenders are giving interbank loans with three-month payday only, instead of two weeks or one month as they used to be, a general director of a big commercial bank in HCMC, who wants to be unnamed, said, adding the interbank lending rate last week remain at high levels of 19-20 percent per annum.


“The lending rates for shorter-payday loans are much higher. Despite knowing the fact that the rate dropping after Tet, many small banks still had to borrow at the high rate as their liquidity is low,” he said.


Analysts predicted the increasing interbank rate will end soon as the central bank extended the deadline for lenders to raise registered capital by one year to ease pressure on banks having difficulty meeting higher requirements.


Prime Minister Nguyen Tan Dung has approved the proposal requiring local lenders to raise registered capital levels to VND3 trillion ($153.9 million), by Dec. 31, 2011, the State Bank of Vietnam said on its website Tuesday.

Source: SGGP

Mobilised interest rate less than 15 percent/year

In Uncategorized on December 16, 2010 at 9:33 am




Mobilised interest rate less than 15 percent/year


QĐND – Saturday, December 11, 2010, 21:8 (GMT+7)

As from December 11, commercial banks will increase their mobilised interest rate from 12 to 15 percent/ year.  


The decision was made at a meeting on December 10 between the State Bank of Vietnam’s (SBV) HCM City branch, the Vietnam Banking Association and commercial banks.


Under the decision, commercial banks will fix the maximum mobilised interest rate at 14 percent/year. In case of promotions in cash or gifts, the real interest rate enjoyed by depositors will not surpass 15 percent/year. Any bank which violates this decision, will be subject to sanctions from management agencies.


Despite a drop in interest rates after the SBV examined commercial banks, the highest mobilised interest rate remain at 15.5-16.5 percent/year.


Source: VOV


Source: QDND

Fluctuation on interest rates hits economy

In Uncategorized on November 22, 2010 at 10:14 am

Party leader: National unity ensures nation’s interest

In Uncategorized on November 18, 2010 at 1:56 pm

Lending interest rates up, troubling enterprises

In Uncategorized on November 12, 2010 at 7:53 am