Central bank asks for foreign exchange reports

Photo: Tuoi Tre

The State Bank of Vietnam has asked credit institutions to provide reports concerning outstanding loans and investments that involve US dollars.

The State Bank is requesting the information so that the institution can begin drafting a monetary policy for the latter months of the year.

Lenders were also told to draw up plans concerning how they will use their foreign currency reserves to pay debt during this year's final quarter and next year's first quarter.

The report must be completed and delivered to the State Bank this Friday.

By the end of September, total outstanding loans in foreign currencies at banks in Ho Chi Minh City were VND186.1 trillion (US$9.5 billion), up 36 per cent against the same period last year.

The US dollar credit growth during September increased by 6.1 percent against August, while the month-on-month dollar credit growth in August was up just 1 percent against July.

In an unusual move, loans in foreign currencies exceeded mobilized capital. Financial experts explained that banks had a surplus of US dollars that they received from mother companies or foreign credit institutions.

This is the second time the central bank has asked for such reports.

In May, commercial banks and financial companies were ordered to provide a detailed report about their foreign exchange operations to help reduce the country's trade deficit and improve Vietnam's payment balance.

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Vietnam Jan-Sept credit expected to rise 19.5 pct

Photo: Tuoi Tre

HANOI - Loans in Vietnam by the end of this month are estimated to rise 19.5 percent from the end of 2009, the central bank said on Thursday, on course to reach an annual target of 25 percent credit growth.

The projection was based on expansion of 19.27 percent as of Monday, State Bank of Vietnam Governor Nguyen Van Giau said in a statement on the central bank's website.

"The credit growth target of 25 percent for the whole of the year will be attained," Giau said in the statement.

The government has supported credit expansion to facilitate economic growth, which accelerated to an annual rate of 7.16 percent in the third quarter.

Credit jumped 37.7 percent last year from 2008, speeding from an annual rise of 23.58 percent the previous year, the central bank has said.

Loans for securities investment of 15 trillion dong (US$769.6 million) had the highest rise of 19.8 percent, consumer loans jumped 19.7 percent to 151 trillion dong while non-production loans rose 18.2 percent to 385 trillion dong, Giau was quoted by Thursday's Thanh Nien newspaper as saying.

He gave no value estimates for Vietnam's total credit at the end of September.

He said lending interest rates dropped very slowly in September, edging down just 0.01 percentage point from August. Lending rates in Vietnam now range at between 13-15.5 percent.

The central bank will work with commercial banks to further cut interest rates, Giau said in the newspaper report.

The central bank said on Wednesday it would relax compulsory reserve requirements for banks that made significant loans for agriculture or rural development as a way to mobilize funding for the countryside.

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S&P says Japan govt credit quality is "slowly sinking"

Photo: AFP

HONG KONG - Japan's credit quality is slowly sinking but not to an extent that could trigger an immediate downgrade, credit rating agency Standard and Poor's said on Tuesday.

"Japan's rating of AA is still valid but the Japanese government credit is slowly sinking," Takahira Ogawa, S&P director for sovereign and international public finance ratings told Reuters Insider in an interview.

"The risk of default is slowly increasing but not to the extent which will change anything at this point in time," he said.

Japan's outstanding public debt is the largest among industrial nations, approaching twice the size of its gross domestic product, although most of it is held by domestic investors.

Ogawa said Prime Minister Naoto Kan's win in a ruling party leadership race indicates a continuation of the government's fiscal and macroeconomic policies, which is not necessarily beneficial to ratings.

"There is no reason to be optimistic simply because of the continuation of the policy of the previous government because the DPJ government has the tendency to take populist measures," he said.

Rival rating agency Fitch Ratings warned in July that a delay in a credible plan before year-end for fiscal consolidation would increase the risk of a rating downgrade.

Ogawa sounded a similar warning note.

"We see some more degrading of the government's credit quality in the next year or two," he said.

Standard & Poor's has a negative outlook on Japan's rating which indicates the potential direction of the rating in the intermediate term which is typically six months to 2 years.

Prime Kan will keep his job after an unexpectedly strong victory in a ruling party leadership vote but must now strive to unify his party and forge deals with the opposition to pass laws in a divided parliament.

"I don't see the ballot result as a key near-term credit rating driver," Andrew Colquhoun, the Fitch ratings sovereign analyst told Reuters.

But he added: "If the DPJ splits, then there would be more political uncertainty which would make it more difficult to see a fiscal plan happening in the medium term -- which would tend to be negative."

Fitch rates Japan's foreign currency debt AA and its local currency debt at AA-minus, with a stable outlook.

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Credit card growth sluggish despite incentives

Many banks in Vietnam have tied up with electronics stores, supermarkets, restaurants, spas, and others to offer discounts to card users

High interest rates, annual fees and safety considerations have prevented the credit card industry from getting off to a roaring start in Vietnam.

Although both domestic and foreign banks have launched several promotion programmes, they still have failed to attract enough customers to use credit cards for their shopping and other needs.

Because they expect the market to be a lucrative one in the future, the banks are pushing the use of cards so as to acquire and expand their market share.

The promotion campaigns have included direct marketing and the granting of credit cards without any fees.

Ho Anh Ngoc, head of retail banking in the southern region for Techcombank, said his bank plans to increase the number of its credit card users to 23,000 by the end of this year. It is targeting customers from all income segments.

Other banks such as Vietcombank, Eximbank, Asia Commercial Bank have launched their own promotions to expand the use of credit cards.

Customers travelling to Singapore between August 27 and September 30, can get a set of X-mini Capsule speakers from Eximbank if they spend at least $500 using their Visa card over three days.

Phi Thi Phuong, head of Eximbank's card management department said since early this year, Eximbank has issued 4,000 credit cards, increasing the total number of customers to 30,000.

To attract more customers, international banks like HSBC and ANZ have sought to increase their market share by marketing on websites and through emails and phone calls to customers.

The banks have also linked up with trade centres and supermarkets to offer discounts for those using Visa or MasterCard for their shopping.

Hoang Long, who works for a transportation company in District 3, said he received an invitation to open a credit card from ANZ, but failed to get one because his monthly salary was less than VND5 million (US$256).

Furthermore, late payments on a Visa card attract very high interest rates of between 1.5 percent to 1.9 percent per month, and this is something that gives pause for thought to Vietnamese clients.

HSBC and Techcombank levy overdue fees of 1.87 percent and 1.6 percent per month respectively.

Card owners also have to pay other kinds of fees.

Nguyen Tu Anh, director of Smartlink Card Joint Stock Co, said customers have to pay considerable attention to opening fees, annual costs, loan rates and exchange rates for international payments.

Hai Duyen, a regular customer of Techcombank, said credit cards were not all as safe as presumed. Recently, she had her pocket picked, and lost VND20 million ($1,025) through her visa card.

According to Duyen, credit cards do not require any password like the ATM card. Thieves can use a forged signature.

Moreover, Vietnamese customers are still not used to using cards for their shopping, and prefer to use cash instead.

Also, many shopping centres are yet to install POS machines to accept credit card payments.

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Credit card growth sluggish despite incentives

High interest rates, annual fees and safety considerations have
prevented the credit card industry from getting off to a roaring start
in Vietnam.

Although both domestic and foreign
banks have launched several promotion programmes, they still have failed
to attract enough customers to use credit cards for their shopping and
other needs.

Because they expect the market to be a
lucrative one in the future, the banks are pushing the use of cards so
as to acquire and expand their market share.

The promotion campaigns have included direct marketing and the granting of credit cards without any fees.

Ho Anh Ngoc, head of retail banking in the southern region for
Techcombank, said his bank plans to increase the number of its credit
card users to 23,000 by the end of this year. It is targeting customers
from all income segments.

Other banks such as
Vietcombank, Eximbank, Asia Commercial Bank have launched their own
promotions to expand the use of credit cards.

Customers travelling to Singapore between August 27 and September
30, can get a set of X-mini Capsule speakers from Eximbank if they spend
at least 500 USD using their Visa card over three days.

Phi Thi Phuong, head of Eximbank's card management department said
since early this year, Eximbank has issued 4,000 credit cards,
increasing the total number of customers to 30,000.

To attract
more customers, international banks like HSBC and ANZ have sought to
increase their market share by marketing on websites and through emails
and phone calls to customers.

The banks have also
linked up with trade centres and supermarkets to offer discounts for
those using Visa or MasterCard for their shopping.

Hoang Long, who works for a transportation company in District 3, said
he received an invitation to open a credit card from ANZ, but failed to
get one because his monthly salary was less than 5 million VND (256
USD).

Furthermore, late payments on a Visa card
attract very high interest rates of between 1.5 percent to 1.9 percent
per month, and this is something that gives pause for thought to
Vietnamese clients.

HSBC and Techcombank levy overdue fees of 1.87 percent and 1.6 percent per month respectively.

Card owners also have to pay other kinds of fees.

Nguyen Tu Anh, director of Smartlink Card Joint Stock Co, said
customers have to pay considerable attention to opening fees, annual
costs, loan rates and exchange rates for international payments.

Hai Duyen, a regular customer of Techcombank, said credit cards were
not all as safe as presumed. Recently, she had her pocket picked, and
lost 20 million VND (1,025 USD) through her visa card.

According to Duyen, credit cards do not require any password like the ATM card. Thieves can use a forged signature.

Moreover, Vietnamese customers are still not used to using cards for their shopping, and prefer to use cash instead.

Also, many shopping centres are yet to install POS machines to accept credit card payments./.

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Credit centre rates 539 listed firms

The Credit Information Centre on Aug. 25 published its 2010 credit
ratings of the nation's listed firms, with 165 of the 539 companies
scoring the highest ranking, an increase of 46 percent over 2009.

The ratings system was developed by the centre and global firm Dun & Bradstreet.

The number of listed firms rated average in terms of creditworthiness
increased to 15, which was blamed on the impact of the global debt
crisis, said Credit Information Centre deputy director Nguyen Huu Duong.

Companies earning the average level in 2009 was only 9, he said.

Listed firms in HCM City posted better creditworthiness than those
in Hanoi , with companies in the rubber and paper industries earning
the highest ratings, followed by consumer goods and manufacturing
enterprises, Duong added.

Credit Information Centre
director Pham Cong Uan said the ratings would improve market
transparency and provide investors with a useful basis for evaluating
their investments.

Vietnam Association of Securities
Businesses general secretary Nguyen Thanh Ky said quality and timely
information was decisive to every investment decision in the stock
market.

Nicholas Teoh, vice president of Dun &
Bradstreet's Asia Pacific Partnerships, said Dun & Bradstreet would
invest 110-130 USD million to improve access to this information online
over the next three years./.

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