According to the General Statistical Office (GSO), as of March 20, 2020, the total means of payment increased by 1.55 percent compared to the end of 2019 (the same period last year increased by 2.54%); capital mobilisation of credit institutions increased by 0.51 percent (the same period in 2019 increased by 1.72%). Notably, credit growth of the economy only increased by 0.68 percent while that of the same period last year by 1.9%, which showed that businesses were facing many difficulties, limiting production and business activities because of the effects of Covid-19 epidemic.
Credit growth in Q1/2020 was also the lowest since 2015. However, in individual banks, credit growth had sharply differentiated. The recent update of SSI Securities Corporation’s banking industry stated that slow credit growth was recorded at three state-owned commercial banks, including Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), as well as commercial banks such as Military Commercial Joint Stock Bank (MB) and Asia Commercial Joint Stock Bank (ACB). That might stem from the fact that these banks were more cautious when making new disbursements to limit credit risk in the future.
Meanwhile, Vietnam Prosperity Joint-Stock Commercial Bank (VPBank), HCM City Development Joint Stock Commercial Bank (HDBank), and Tien Phong Commercial Joint Stock Bank (TPBank) broke the pattern and exploded with high credit growth; about 4.8 percent by the end of February 2020 for VPBank, five percent by the end of February 2020 for HDBank and nine percent by the end of March 2020 for TPBank.
The SSI analysis team recognised that VPBank and TPBank were particularly active in buying corporate bonds. For HDBank, the relatively high credit growth was due to loan agreements with several corporate customers, which were signed before the end of 2019.
Currently, banks were continuing to expand special loan packages to support businesses. After the issuance of Circular 01 on March 13, 2020, each bank had announced a separate credit support package for corporate customers and individuals affected by the Covid-19 virus outbreak. Recently, at a meeting of the government with representatives of 20 banks, it was agreed that banks would expand their supplementary loan to support customers because of the urgency of the current situation.
The government had provided banks with various forms of support, including cutting interest rates and short-term deposit rates ceiling and reducing interbank transaction fees by 50 percent (Circular 04/2020), as well as an extension of tax payment time (draft proposed revision of Decree). Banks had also been asked not to pay cash dividends. State-owned banks were requested to retain income from the previous year to support the economy.
