HCMC – Mobilization of all credit institutions in the first month of 2010 increased by only 0.3% from late last year, according to the latest report of the State Bank of Vietnam.

Outstanding loans as of late January had risen by 1% from late December. Although January’s credit growth was not as high as in previous months, it was fairly high compared to January’s mobilization growth.

January’s mobilization growth reflected the current situation that banks cannot mobilize funds from the public with low borrowing rates.

Most joint-stock banks have scaled up borrowing rates in Vietnam dong for terms from one to 12 months to 10.49%, or even 10.499%, as 10.5% per year is the level warned by the central bank.

However, banks have managed to raise borrowing rates via promotions such as giving cash, gold or a lucky draw to attract depositors. Therefore, the interest rate in Vietnam dong is scaled up to 12%-13% after adding a promotion. For example, An Binh Commercial Bank last Thursday launched a promotion giving gifts to depositors who dropped at least VND10 million into the bank and those customers will also have the chance to participate in a lucky draw for a kilo of gold.

Since borrowing rates for all terms are the same, customers only want to deposit for terms of one to three months.

Therefore, middle and long term capital of banks is decreasing. According to the central bank’s HCMC branch, short term capital of banks in the city accounts for 70% of total mobilization.