Chair of a bank told reporters of the local Newswire Dau Tu Chung Khoan (or Securities Investment) that though it is just the end of May, the credit room assigned by the State Bank in this year has almost been used up. Banks will certainly have to ask for credit room expansion in the near future.
Another bank CEO said his bank was granted with 14 percent credit growth quota in 2018 and so far nearly 10 percent has been used up.
It is not too much surprising when the credit growth target of banks has run out or has almost run out because to try repeating the story of negative growth in the first quarters of the year, commercial banks have made efforts to strengthen lending right from the beginning of the year. Talking to Dau Tu Chung Khoan, a senior leader from the Credit Department of Economic Sectors said the credit growth of the entire system as of June 1 was about 5.6 percent.
Besides, with prospering business situation, many banks were approved by the State Bank to expand branches and transaction offices in 2018 while the credit growth room is still “narrow”.
If this room is not expanded, the situation will be very intense and banks have to shrink to fit. Even, senior leader of a commercial bank disclosed “Many banks such as Viet A Bank, Nam A Bank, AB Bank, Eximbank have now had negative credit growth room”.
In this context, Chair of a bank said once the credit growth room is about to hit the ceiling, the bank has to ask the State Bank for room expansion. The story seems to be simple but is entirely not easy because no bank can be approved.
“At the beginning of the year, bank leaders urged their employees to strengthen lending. Now, it is not the middle of the year but the whole year credit growth room has almost been used up, and it is too hard for banks to ask their employees to stop?” said the Chair.
Leader of another bank said “With large-scale banks, the one percent credit growth rate seems to have equalled to small banks, so it is not necessary to assign them too high credit growth room. Meanwhile, small banks with development potential are limited with credit “room”. This administrative measure has had certain value in the previous instability period but so far, the imposition of credit growth target does not create healthy competition and development motivation for banks”.
In a discussion with Dau Tu Chung Khoan, bank leaders shared the same opinion that currently, the State Bank should regulate the system based on market mechanism that is to remove credit growth limit because in fact the management agency has had in its hand a tool to tightly control banks i.e. the Capital Adequacy Ratio (CAR).
“The numerator of CAR is equity and denominator is credit and investment. Accordingly, the credit growth control by this factor will be more reasonable and not administrative. We are waiting for management agency to have a more reasonable policy”, said a bank CEO.
Noticeably, the comprehensive report about financial organisation auditing in 2017 by the State Audit showed that many commercial banks such as Vietinbank, BIDV, Vietcombank, Agribank, Nam A Bank, SeABank, VPBank, VIB, VietABank, Bao Viet Bank, TPBank, PVcomBank, LienVietPostBank, SHB, and HDBank exceeded the credit growth limit allowed by the State Bank.
“This information causes some to misunderstand that the aforementioned banks self-determined to move beyond the credit growth limit but in fact, banks have had to ask for the State Bank for approval of room expansion. This issue alone has shown inadequacies in allocating credit growth targets”, said a commercial bank leader.
Discussing more about this, Nguyen Xuan Thanh, Development director of Fulbright Vietnam said Vietnam’s economic growth in Q1 was good and is more likely to achieve the whole year credit target. In order for investors, businesses and the people to believe that the macro economic situation has been stable, the current moment is the suitable one to have adjustments of administrative measures, replacing them by indirect tools that are more market oriented.
“In the current context, if supposing that the banking system has really improved, many weaknesses have been recovered, then the State Bank needs to quickly announce a policy adjustment roadmap”, said Thanh.
