Sunday, 23:02 04/02/2018
State Treasury deposits VND238.5 trillion at commercial banks
Inter-bank interest rates plunged due to massive capital flows into the Vietnamese market and difficulties in public investment disbursements, prompting the State Treasury to transfer a large amount of deposits at the State Bank of Vietnam to commercial banks last year.
The State Treasury deposited VND160 trillion (US$7.05 billion) at commercial banks at the end of August last year, up 65% against January. The detailed number for the entire last year has released yet, but the total amount of the Treasury’s deposits at five commercial banks of Vietcombank, BIDV, VietinBank, MBBank and VIB were more than VND238.49 trillion by the end of December, up 3.3 times against January.
Vietcombank received the largest amount of the deposits at nearly VND165.1 trillion, three times higher than the end of September. The State Treasury’s deposits at Vietcombank included a recent State divestment deal from Sabeco worth US$5 billion or over VND113 trillion.
The Treasury also deposited nearly VND11.1 trillion at Vietinbank by the end of last year.
According to industry insiders, in contrast to previous years when the liquidity was usually short in the end of the year due to the rise of payment needs, liquidity of the banking system until the end of 2017 remained abundant partly thanks to the state funds.
Saigon Securities Incorporation (SSI) said that this situation is firstly thanks to the reasonably controlled credit growth (18.1%), and secondly due to the slow disbursement of public investment, which has led to a large amount the State Treasury’s capital deposited at banks.
Besides, it is also thanks to the surplus in the balance of payments, the $7.5 billion foreign exchange reserves and increase of domestic currency supply to the market by the State Bank of Vietnam (SBV), SSI said.
Earlier in July last year, the Vietnam Institute for Economic and Policy Research (VEPR) also reported the State Treasury’s deposits in the banking system are considered a main reason behind the high liquidity in the market.
“The slow disbursement of public investment helped increase the State Treasury’s deposits in commercial banks, reducing pressure on interest rates,” it said.
With the abundant liquidity in the banking system, commercial banks last year also increased their investment in long-term bonds. Earlier, bonds with a tenor of 30 years were mainly bought by insurance companies but last year saw a drastic shift when banks bought nearly VND15 trillion ($660 million) out of VND28 trillion worth of 30-year bonds successfully issued.
Thanks to the abundant liquidity in the banking system, interest rates in inter-bank and G-bond markets have recently also declined significantly despite rising capital demands ahead of Tet (Lunar New Year), the country’s biggest holiday season.
Reports of the Maritime Bank’s economic research division showed that interest rates of loans in VND reduced 0.25-0.50 percentage points in all terms in the last week of January this year to 1.58% for overnight loans, 1.73% for one-week loans, 2.13% for two-week loans and 3.70% for one-month loans.
This is different from the previous years when the interest rates often rose significantly few weeks ahead of Tet, which saw rising demand for capital for shopping and other payments. For example, ahead of Tet last year, inter-bank rates surpassed 2% for overnight and one-week loans.
The past week also saw a growing investment in G-bonds as investors bought all VND3.5 trillion (US$154.18 million), of which VND2 trillion were 10-year G-bonds and VND1.5 trillion were 15-year G-bonds.
Yields of the bonds dropped sharply by 0.52-0.70 percentage points to 4.38% for 10-year G-bonds and 4.5% for 15-year G-bonds.
The Treasury deposited nearly VND165.1 trillion at Vietcombank by the end of last year
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The Treasury also deposited nearly VND11.1 trillion at Vietinbank by the end of last year.
According to industry insiders, in contrast to previous years when the liquidity was usually short in the end of the year due to the rise of payment needs, liquidity of the banking system until the end of 2017 remained abundant partly thanks to the state funds.
Saigon Securities Incorporation (SSI) said that this situation is firstly thanks to the reasonably controlled credit growth (18.1%), and secondly due to the slow disbursement of public investment, which has led to a large amount the State Treasury’s capital deposited at banks.
Besides, it is also thanks to the surplus in the balance of payments, the $7.5 billion foreign exchange reserves and increase of domestic currency supply to the market by the State Bank of Vietnam (SBV), SSI said.
Earlier in July last year, the Vietnam Institute for Economic and Policy Research (VEPR) also reported the State Treasury’s deposits in the banking system are considered a main reason behind the high liquidity in the market.
“The slow disbursement of public investment helped increase the State Treasury’s deposits in commercial banks, reducing pressure on interest rates,” it said.
With the abundant liquidity in the banking system, commercial banks last year also increased their investment in long-term bonds. Earlier, bonds with a tenor of 30 years were mainly bought by insurance companies but last year saw a drastic shift when banks bought nearly VND15 trillion ($660 million) out of VND28 trillion worth of 30-year bonds successfully issued.
Thanks to the abundant liquidity in the banking system, interest rates in inter-bank and G-bond markets have recently also declined significantly despite rising capital demands ahead of Tet (Lunar New Year), the country’s biggest holiday season.
Reports of the Maritime Bank’s economic research division showed that interest rates of loans in VND reduced 0.25-0.50 percentage points in all terms in the last week of January this year to 1.58% for overnight loans, 1.73% for one-week loans, 2.13% for two-week loans and 3.70% for one-month loans.
This is different from the previous years when the interest rates often rose significantly few weeks ahead of Tet, which saw rising demand for capital for shopping and other payments. For example, ahead of Tet last year, inter-bank rates surpassed 2% for overnight and one-week loans.
The past week also saw a growing investment in G-bonds as investors bought all VND3.5 trillion (US$154.18 million), of which VND2 trillion were 10-year G-bonds and VND1.5 trillion were 15-year G-bonds.
Yields of the bonds dropped sharply by 0.52-0.70 percentage points to 4.38% for 10-year G-bonds and 4.5% for 15-year G-bonds.
