Tuesday, August 4, 2020 3:07:38 PM - Markets open
VN-INDEX 827.57 +12.92/+1.59%
HNX-INDEX 112.50 +2.08/+1.88%
UPCOM-INDEX 55.89 +0.39/+0.70%
Central bank to keep monetary policy on hold through 2019
Vietnam News - 7/10/2019 1:04:39 PM
 (0 ratings. You must sign in to rate.)
HÀ NỘI The State Bank of Việt Nam (SBV) will hold its benchmark refinancing and discount rates at 6.25 per cent and 4.25 per cent, respectively, in addition to maintaining its 14 per cent credit growth target for the remainder of 2019, experts forecast.
“We expect the SBV to keep its monetary policy on hold for the remainder of 2019. Monetary policy transmission in Việt Nam remains weak and this informs our view for the SBV to continue to manage financial risks through non-interest rate measures such as loan directives and macro-prudential measures,” analysts from Fitch Solutions told Việt Nam News.
On the one hand, the analysts said, Việt Nam’s five-year government bond yield stands at 3.85 per cent, below the SBV’s discount rate of 4.25 per cent, and this continues to suggest that monetary policy transmission is still not optimal due to excess liquidity in the banking system.
In addition, bank lending rates are high and appear to be on an upwards trend. For example, interest rates at Techcombank are between 6.80 per cent and 9.83 per cent on large VNĐ-denominated corporate loans in June, compared to between 6.40 per cent and 9.00 per cent in March. Moreover, high deposit interest rates at 6.80 per cent for tenures above 12 months for both Agribank and Vietcombank also suggest that lending interest rates are likely to be high at these banks.
Speaking about monetary policy in the second half of this year, SBV deputy governor Nguyễn Thị Hồng said the SBV would continue to follow a pro-active, flexible and cautious monetary policy as well as working in close conjunction with fiscal and other policies to control inflation, sustain the macro-economy and support economic growth.
According to Fitch analysts, macro-prudential measures will continue to be the method of choice for the SBV over the coming quarters to manage financial stability risks in the economy.
Under the SBV’s regulations, the proportion of short-term capital to be used for medium and long term lending by banks has to be reduced to 40 per cent in 2019 from 45 per cent in 2018. This has already seen some smaller and less well-capitalised banks raise interest rates offered on long-term time deposits since the first quarter of this year with the aim of attracting the capital needed to meet this requirement.
In June, the SBV released a draft circular seeking public comments on further macro-prudential measures the central bank intends to introduce to manage financial risks in the economy, with a specific focus on managing the risk of lending to the real estate segment.
The circular encompassed a number of changes, including a further reduction to the ratio of short-term capital for medium and long term loans to 30 per cent by July 1, 2020, with the aim of helping the central bank manage liquidity risks in the banking sector. To be sure, this regulatory change would apply to loans in all sectors and not just the real estate sector.
Other regulatory changes proposed include raising the risk weight ratio for home purchase loans worth VNĐ3 billion and above and loans worth between VNĐ1.5 billion and VNĐ3 billion at 150 per cent and 100 per cent, respectively, from 50 per cent at present. Housing mortgage loans worth less than VNĐ1.5 billion and loans for the purchase of social and government supported housing projects will remain at the risk weight ratio of 50 per cent.
According to the SBV, the aim of these changes is to channel real estate credit toward borrowers with genuine housing needs instead of speculators and to balance the development of low-cost commercial and social housing as demand in the low-cost segment still outstrips supply.
Fitch analysts also expect the SBV to focus efforts on banking sector reforms, explaining this was because credit growth was one of the SBV’s main monetary policy tools.
The SBV tailors credit growth quotas for each bank, with healthier banks (assessed based on the bank’s operations and ability to grow credit sustainably) being assigned a higher quota, vice versa, with the aim of regulating overall credit growth within its annual target.
The SBV has so far also instructed credit institutions to implement a host of administrative reforms over the past couple of years, which include the simplification of borrowing procedures, the provision of adequate guidance for borrowers, and the improvement of restructuring plans associated with the handling of bad debt. 
"We believe that a strengthening of credit institutions and a stronger lending framework as a result of the Government's continued pursuit of banking sector reforms will support more sustainable credit growth over the long term," Fitch analysts said. VNS
Read original article here
Newer News
13:54 Reference exchange rate up 7 VND on August 4
23/07 Reference exchange rate down 1 VND on July 23
21/07 Reference exchange rate down 3 VND on July 21
15/07 Reference exchange rate up 10 VND on July 15
13/07 Reference exchange rate up 4 VND on July 13
11/07 Reference exchange rate down 5 VND on July 10
07/07 Reference exchange rate down 5 VND
03/07 Việt Nam FDI inflows to accelerate despite de-globalisation
03/07 Reference exchange rate up 5 VND from previous day
02/07 Reference exchange rate down 10 VND
Older News
09/07 Reference exchange rate up on July 9
08/07 Reference exchange rate up 12 VND at week’s beginning
08/07 Banks announce impressive profits in first half of 2019
05/07 Forex reserves reach highest level to date
05/07 Reference exchange rate unchanged on July 5
04/07 Reference exchange rate revised up on July 4
02/07 Reference exchange rate continues to go down
01/07 Reference exchange rate down strongly at week’s beginning
29/06 Việt Nam's insurance industry keeps thriving in H1 2019
28/06 Reference exchange rate revised up 1 VND on June 28
Newsletter Signup
Top Stories
GDP forecast to grow 3.8 percent this year
New regulations about corporate bond issuance
Reference exchange rate remains unchanged
New traders flock to market
Reforms needed to attract foreign portfolio investment: fund manager
Market Update
Last updated at 3:05:05 PM
VN-INDEX 827.57 +12.92/+1.59%
Real-time chart
Top 5 Actives
Top 5 Gainers
Top 5 Losers
My Favorite Quotes
Your most recently viewed tickers will automatically show up here if you type a ticker in the Get Quotes box on the top of the page.
Company Research
Type in the symbol above for thorough background information, key statistics and financial information.
Stock Sectors
We continuously improve our services, here are the latest updates...
Allow you to monitor a customised group of securities. You can set up multiple Portfolios to help you better manage your investments.
Trigger Alerts
Get up-to-date alerts delivered directly to your email address.
Stock Screener
Allow you to filter the market and find exactly what sort of company you are looking for.
Live Terminal
Get instant access to FREE REAL-TIME streaming quotes for hundreds of stocks from HOSE, HNX and UPCOM exchanges.