After a decline in the first month of the year, the total outstanding
loans of commercial banks in February increased 0.71 percent against
December last year, according to the State Bank of Vietnam (SBV).

However, the SBV reported that loans slid 0.28 percent from late 2012,
attributing the fall to a decline in foreign currency-denominated loans
as targeted by the central bank.

The Government’s
measures to resolve difficulties for business and production through
reaming out the credit flow took effect in February, causing the surge,
according to the bank.

Liquidity of credit
institutions was good, helping lending interest rates in the inter-bank
market inch down against the beginning of the year. They stayed at 2.7-3
percent for overnight loans, 3-3.5 percent for one-week loans and 4.5-5
percent for one-year loans.

Lending interest rates
for production and business were also more stable than at the end of
2012. The rate for agricultural and rural areas, exports, small-and
medium-sized firms, support industry and high-tech application firms
stood at 9-12 percent yearly. The rates for short-term loans given to
other industries averaged 11-15 percent per year.

The SBV said that it will impose credit growth limits on credit
institutions so that the entire banking system can meet the credit
growth target of 12 percent this year.

By late February, deposits also increased two percent against the end of 2012.

Deposit interest rates also remained stable at one to two percent for
non-term deposits, 7.8-8 percent for deposits of less than one year and
10-11 percent for deposits of more than one year.

Thanks to the improved liquidity, many banks cut deposits interest rates
and kept the rate lower than the 8 percent cap regulated by the central
bank. The central bank places an 8 percent interest rate cap on under
12-month deposits; banks have previously offered the cap to attract
depositors.

On March 20, the Joint Stock Commercial
Bank for Foreign Trade of Vietnam (Vietcombank) was the latest bank to
unexpectedly announce it will cut interest rates for some deposits. It
decided to trim interest rates for on-to three-month deposits to 7.5
percent per annum from the earlier cap at 8 percent. The lender also
paid 9.5 percent to deposits of over 12-month terms, down one percent
from earlier.

Asia Commercial Bank announced earlier
that it will offer only 7.7-7.8 percent per year for deposits of less
than 12 months while Saigon Commercial Bank (SCB) offered a similar rate
of 7.92 percent for deposits of less than 11 months.-VNA