Macroeconomic stability and positive developments on real estate market, etc. are the very good opportunities for banks to promote lending. However, not all banks record good credit growth as expected.
The first quarter (Q1) 2018 financial report of many banks showed that the credit growth picture in Q1 was clearly differentiated. At Commercial Joint Stock Bank for Foreign Trade of Vietnam, by March 31st 2018, lending to customers reached 568.031 trillion dong, up by 6 percent compared to the beginning of the year, while deposits of customers saw slower growth of 3 percent, reaching 730.986 trillion dong.
The total assets of the bank was 1,003 trillion dong, down by 3.1 percent compared to late 2017. Meanwhile, the deposits at the State Bank of Vietnam (SBV) and lending at other credit institutions (CIs) all dropped. The bank’s bad debt ratio was 1.36 percent, in which irrecoverable debts increased from 1.940 trillion dong to 2.211 trillion dong.
Closing Q1 2018, Asia Commercial Joint Stock Bank posted a credit growth of 6.6 percent, while mobilisation of deposits increased by 7 percent compared to the beginning of the year. For Orient Commercial Joint Stock Bank, the credit growth in the period reached 8.8 percent, increasing the outstanding loans to customers to 51.974 trillion dong. However, OCB’s customer deposits fell by 0.3 percent to 53.047 trillion dong.
By March 31st 2018, the total mobilisation of Hochiminh city Development Commercial Joint Stock Bank (HDBank) reached 161.156 trillion dong, up by 15.2 percent; while total outstanding loans reached 110.990 trillion dong, up by 30 percent compared to the same period of 2017, up by 10.9 percent compared to late 2017. In particular, lending to customers reached 105.977 trillion dong, up by 33.2 percent compared to the same period of 2017 and up by 11.5 percent compared to late 2017. The bank’s bad debt ratio was controlled at 1.37 percent on total outstanding loans.
Meanwhile, closing the Q1 2018, the credit growth of Vietnam Technological and Commercial Joint Stock Bank (Techcombank) was modest at 1.9 percent, but still brought the bank a net interest income of 2.546, up by 16.6 percent compared to the same period of 2017. Meanwhile, the bank’s other activities increased sharply. For example, the trading of investment securities recorded a net profit of 441 billion dong, 4.7 times higher than the same period of 2017; and income from capital contribution and share purchase rose by 2.5 times, reaching 894 billion dong; respectively accounting for 9.5 percent and 19.2 percent of the total profit.
Closing the first quarter of the year, Vietnam Prosperity Commercial Joint Stock Bank (VPBank) reported a mobilisation from customers of 143.121 trillion dong and outstanding loans of 185.629 trillion dong, respectively increasing by 3.5 percent and 7.2 percent compared to late 2017.
Export Import Commercial Joint Stock Bank (Eximbank) also recorded not high credit growth in Q1 2018. Specifically, the bank’s customer deposits fell by 4 percent compared to late 2017 to 112.830 trillion dong; while lending to customers also dropped by 0.8 percent to 99.499 trillion dong. Accordingly, the bank’s total assets by the end of Q1 declined by 3.8 percent to 143.630 trillion dong.
Some banks even recorded negative credit growth. For example, An Binh Commercial Joint Stock Bank (ABBank) saw a credit growth of negative 4.7 percent by the end of the first quarter compared to late 2017. The bank’s outstanding loans were 45.656 trillion dong.
Banks’ business plans still rely on credit growth limit
Information from the SBV shows that by the end of April 2018, the credit growth was over 5 percent, similar to the same period of 2017, which is a fairly high level compared to the annual credit growth target of 17 percent. That is also the reason why banks expect their credit growth limits to be loosened, thereby adjusting the business plans in 2018.
For example, at Vietnam Thuong Tin Commercial Joint Stock Bank (VietBank), in the first scenario in which the credit growth is 11 percent as assigned by the SBV, the bank aims to reach a total assets of 48 trillion dong this year, up by 16 percent. The outstanding loans and mobilisation from customers are expected to be respectively 31.900 trillion dong and 39.900 trillion dong, up by respectively 11 percent and 27 percent. The minimum pre-tax profit is 97 billion dong, much lower than the 263 billion dong recorded in 2017.
In the second scenario, if the credit growth limit is raised to 32 percent, VietBank targets to reach total asset growth of 30 percent (reaching 54 trillion dong), mobilisation growth of 51 percent and pre-tax profit growth of 14 percent (reaching 300 billion dong).
The pre-tax profit plan in 2018 of Vietnam International Commercial Joint Stock Bank (VIB) is 2.005 trillion dong, up by 43 percent compared to 2017. Meanwhile, the plan for total outstanding credit includes two scenarios. In the first scenario (approved by the SBV), the total outstanding credit is planned to reach 95.960 trillion dong, up by 14 percent, in which the total outstanding loans are expected at 91.045 trillion dong. In the second scenario, the total outstanding credit is expected at 105.220 trillion dong, up by 25 percent, in which the outstanding loans reach 99.830 trillion dong, provided that there are additional approvals of SBV.
According to financial expert, the credit growth of small banks which are having good potential is currently limited. Thus, there should be more conditions for this group to develop, while large-scaled banks do not necessarily to strongly expand credit at all costs.
Dr Nguyen Xuan Thanh from Fulbright University Vietnam said that with the positive results in macroeconomic stabilisation, the SBV should have a roadmap to adjust monetary and credit policy instruments, including the abolition of the ceiling interest rate and credit growth limit.
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