Many banks in Vietnam had abundant capital sources during the recent Lunar New Year Festival (Tet), while some faced capital shortages and had to ask for assistance from the State Bank of Vietnam (SBV) and other banks last year. Many banks even posted a high capital growth rate before Tet. Although there were abundant capital resources, it was forecast that interest rates would keep increasing slightly in the coming time.

According to the Bank for Foreign Trade of Vietnam (Vietcombank), deposits from both enterprises and individuals increased sharply after the Tet holiday. The increase was attributed to overseas remittances, incomes from salaries, and Tet bonuses from individuals. Since early this year, the real estate market has remained fairly stable with sources idle capital from individuals, which are not invested in the sector. Therefore, banks have collected a huge amount of capital after the Tet holiday.

According to initial statistics, the Bank for Investment and Development of Vietnam (BIDV) attracted a lot of deposits in January 2006, an increase of 1.4 percent against the figure of December 2006. The increase in deposits mostly came from individuals, said BIDV.

Up to now, the number of account holders (depositor) at its transaction sites remains rather high while there has been a switch between the two depositors, people and businesses. In fact, the amount of term deposits from businesses is reducing while that of the private sector is on the rise.

In addition, measures to mobilise capital after the traditional Lunar New Year Festival (Tet) have not yet been implemented as effectively as last year. At present, several banks are launching capital mobilisation programmes that offer rewards and gifts in a bid to attract idle money after Tet.

At the beginning of the year, the capital situation of banks showed good signs, but it eas forecast that interest rates would further increase in the coming time.

The Bank for Foreign Trade of Vietnam said the interest rate of the US dollar is likely to rise slightly and will be more stable this year after consecutive increases last year due to the impact of rising interest rates. Because of the close relationship between the Vietnamese dong and the US dollar, a slight increase in the US dollar, affects the control of Vietnamese dong interest rates.