SBV adjusts exchange rate, ups prime interest: The State Bank of Vietnam on 26 Nov dramatically adjusted the exchange rate for the VND by about 3.44% from VND 17,034 to 17,961 per USD. The daily forex trading band was also narrowed from plus-or-minus 5% to plus-or-minus 3%, meaning the exchange rate would creep within a band of VND 17,422 – 18,500. The Governor said that the State Bank has just adjusted the rate in order to balance economic targets and has not devalued the dong. In parallel move on 26 Nov. aimed at defusing a growing threat of inflation, the SBV also raised the prime interest rate by a percentage point to 8%, effective December 1.
Banks declare lower profits for October: Commercial banks profits have proved to be lower than previous months as was anticipated. In the first months of the year, banks updated information about profits regularly. However many are yet to provide figures for October even though November is nearly over. Analysts say it’s because figures are not as “beautiful” as previous months. In general, banks always see higher profit in the last months of year. However, this year is different. A lot of joint stock banks have reported a slowdown in profit in September and October. Maritime Bank which declared impressive profits for mid-year months, has reported a more modest VND 80 bln for October. According to Sacombank, the profit in the third quarter of the bank decreased by 15% from the second quarter, while Saigon-Hanoi Bank’s (SHB) third quarter’s profit was just a half of that tin the second quarter. Analysts have pointed out that decrease in revenue from credit was the main reason behind the profit decrease. Banks now have to offer high deposit interest rates to attract more capital, while they can not lend at more than 10.5%. Banks have been tightening credit since September, since they have limited capital resources. In the latest move, the SBV has raised basic interest rates from 7 to 8% p.a, thus raising the ceiling lending interest rate to 12%. The move is hoping to help commercial banks improve liquidity and widen the margin interest rate. However, bankers say they have only one month more to enjoy the new mechanism. Though banks’ reports show decreases in October, they are still confident about the possibility of fulfilling yearly business plan. ACB got VND 1,800 bln profit in the first nine months of the year and expects to get VND 600 bln in the last three months. Techcombank has predicted profits of VND 2,245 bln, an increase of VND 500 bln over 2008. Big JSBs, though facing difficulties in expanding credit, still can obtain big profits from non-credit services. The revenue from non-credit services now accounts for 50% of total revenue at ACB and Techcombank and 40%% at Sacombank.
Vietnam financial sector attractive for investors. Vietnam has become a preferred destination of international financial investors due to the rapid liberalisation, privatisation and globalisation of the economy, the US market research company RNCOS said in a recent report. The banking sector has shown unprecedented growth in the recent past, said the report “Vietnam Financial Sector Forecast to 2013”, adding that the sector remains largely underdeveloped compared to the banking sectors in other Asian economies like India and China.
BNP Parisbas wants to increase stake in local bank. French bank BNP Parisbas is mulling increasing its stake in a Vietnamese bank to 20%, the highest limit allowed for foreign investors. The foreign bank signed an agreement to acquire the additional 5% in Orient Commercial Bank (OCB).
Source: vietstock
