Vietnam Money-Dong loan rates expected to stabilise

HANOI, June 9 (Reuters) - Loan rates in Vietnamese dong were expected to be more stable in June after banks boosted deposit rates to raise dong funds and offset a liquidity crunch, bankers said on Monday.

The State Bank of Vietnam, the central bank, has tightened liquidity this year to try to tackle seven consecutive months of double-digit annual inflation, which hit 25.2 percent in May.

The central bank has capped bank dong deposit and loan rates at 18 percent after banks rushed to pull in funds in February, when lending rates surged as high as 40 percent.

It said deposits at banks in May rose 1.05 percent from April. Dong deposits increased 1.06 percent and foreign currency deposits expanded 0.99 percent. Overall deposits in the first five months of the year were 4.1 percent higher than at the end of last year.

"Lending rates in Vietnamese dong have stabilised from past week's fluctuations with short-term rates ranging around 15.6 to 18 percent and medium-term rates at 17-18 percent," the central bank said in a weekly report on Monday.

Vietcombank, one of the four largest lenders, said on Monday it has raised the annual interest rate on 12-month dong deposits to 15.5 percent from 14.4 percent.

Another major private lender, Sacombank, has also raised its 12-month dong deposit rate to 14.7 percent from 14 percent previous.

Vietnam has more than 40 banks, but Vietcombank and three other state-run banks together handle 70 percent of market deposits and lending.

On the interbank market on Monday, major lenders offered overnight dong loans in a wide range of 10 to 17 percent, compared to 10-13 percent in late May VNIBOR.