As reported by the general Statistical Office (GSO), as of March 20, the total money supply increased 3.23 percent from the end of 2017 (up 2.88 percent in the same period last year); the capital mobilisation of commercial banks swelled 2.2 percent (up 2.43 percent in the same period last year), and credit growth of the economy touched 2.23 percent (up 2.81 percent in the same period last year).
This is considered to be positive as credit trend in the first quarter of the year often decreases from the previous ones.
However, finance experts suppose that warnings about credit growth in non-production sectors especially real estate, consumption, need to be given. Only by doing so, can banking sector limit bad debt risks.
Though credit growth in commercial banks has not been disclosed by banks after the first three months, almost all of them said that lending activity will continue to be positive this year.
This year, the State Bank initially assigned credit growth target to members at rather low level i.e. 14-16%, even lower for small banks, in order to control the overall growth of the sector as well as the system’s safety. However, based on actual operational situation, this agency will consider loosening the target for specific members.
Credit growth has positively influenced on the operation of the banking sector. Apart from outstanding loans, according to a financial and banking expert, the profit that banks earned in 2017 comes from the strongly decreased operating costs and increased debt recovery.
However, according to the aforementioned expert, Vietnam’s credit has already been rather high so pursuing credit growth is very “sensitive” at this time. That is not to mention, if credit acceleration into real state is uncontrolled, the vicious cycle of bad debt will appear in the next few years.
CEO of HSBC Vietnam Pham Hong Hai also said in order to develop sustainably, banks need to strengthen service segment, instead of just focusing on credit.
In addition, according to Hai, banks also need to pay attention to the credit flow into risky channels such as real estate, securities and BOT project.
Realising that the focus on credit is unstable, many banks have started to shift to digital banks and strengthen service segment.
Nguyen Duc Vinh, CEO of VPBank said FE credit finance company, after being put into operation, became growth momentum for the bank, contributing about 20 percent to the total outstanding loans, bringing about as much as 50 percent of the net interest income.
However, Vinh also said VPBank cannot just rely on FE credit but in its plan for the next five years, digital banking, retail banking, credit card, service, etc. will be the focuses of VPBank.
Nguyen Dinh Tung, CEO of OCB also said the bank has just applied the Omni Chanel network into its operation the first step in the transformation into digital banking.
Earlier, many banks realised this trend and strongly invested into e-banking such as TPBank, Sacombank, ACB, etc. while striving to increase service revenue by 30-40 percent of the total source of revenue, in order to reduce the reliance on credit.
Nguyen Hoang Minh, deputy director of the State Bank’s HCM City branch said over the last period, the State Bank has had many documents warning banks’ capital injection into real estate sector.
Minh said currently, real estate loans account for 10.8 percent of the total outstanding loans in HCM City. With the outstanding loans of about 1,750 trillion dong in HCM City, real estate loans are equal to about 198 trillion dong. That is not to mention real estate loans hidden in individual consumer loans.
