Vietnam bank deposits continue to fall: report

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Deposits at banks fell for a second month in a row in October, while credit grew slightly by only 0.05 percent, the central bank said in a new monthly report.

According to the State Bank of Vietnam, dong deposits fell 1.29 percent, while dollar deposits rose 1.73 percent compared to September. During the past year, total deposits in the banking system increased 8.59 percent.

It has been expected that dong deposits would drop after the central bank ordered all commercial banks to strictly abide by the interest rate cap of 14 percent per year. Some experts, however, said the drop is temporary and should not be seen as a cause for worry.

The central banks said both dong and dollar loans expanded 0.05 percent in October. Compared to the end of last year, credit grew 8.61 percent, lower than the credit growth target of 12 percent that the government is aiming for.

Interest rates remained stable in October, the monthly report said. Banks offered loans at 17 percent to 21 percent per year to the agricultural and manufacturing sectors.

Total money supply fell 0.5 percent from September but rose 7.5 percent compared to the end of last year, the central bank said.

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