Interest rate cut targeted for end months

The central bank will instruct commercial banks to try and cut interest rate in the remaining months of the year. - Photo SBV

It is among SBV’s monetary policies that will be applied in the remaining months of the year, SBV announced on Tuesday.

According to SBV, it is ready to support liquidity for credit institutions, aimed at ensuring the safety of the banking system and stabilising deposit interest rates.

Besides this, the central bank also required credit institutions to take measures to reduce operating costs and improve business efficiency to create favourable conditions to reduce lending interest rates for priority sectors and business areas.

Lending in the remaining months of this year will continuously focus on prioritised areas of agricultural production, export business, production of small and medium-sized enterprises, auxiliary industry and high-tech production.

The central bank reported that credit growth in the first nine months this year was 11.02 per cent, higher than the rates of 10.46 per cent and 10.78 per cent in the same period of 2016 and 2015, respectively.

During the period, lending to prioritised industries rose against last year, of which loans to agriculture and rural development, and high-tech production were up 17 per cent and 25.12 per cent, respectively.

Liquidity of the banking system in the first nine months was relatively good. The average ratio of lending to deposits (LDR) of the system reached some 87.2 per cent, higher than the 87 per cent recorded at the end of the second quarter and much higher than late 2016 (85.47 per cent) and 2015 (85.6 per cent). The LDR in dong was 88 per cent and in foreign currency was 73 per cent.

Average ratio of short-term funds used for medium and long-term loans of credit institutions during the period was estimated at some 33.4 per cent, slightly down compared with 34.5 per cent in late 2016.