Until now, according to Nghiem Xuan Thanh, president of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), this bank is assigned the highest growth target of the system, at 15 percent. However there are banks that have set a credit growth target of up to 30 percent.
According to the orientation of the State Bank of Vietnam (SBV) on credit growth, in 2019, the whole industry will maintain a growth rate of about 14 percent, equivalent to 2018, which can be flexibly changed according to market movements and macroeconomic. This year is the second year in a row that credit has been tightened.
Previously, when SBV controlled credit tightly, it often assigned targets to each bank and these criteria were widely publicised, but in recent years, SBV only announced to banks themselves. And also until the last year when the credit was tightened, the profit of many banks was affected, especially Vietnam Joint Stock Commercial Bank of Industry and Trade (Vietinbank), that was not allowed to lend in the fourth quarter of 2018, had to bear the loss of 853 billion dong while it had a profit of approximately two trillion dong during the previous quarters. Similarly, as the credit growth target was lower than previous years, the profit of Vietnam Prosperity Joint Stock Commercial Bank (VPBank) did not reach the original plan.
At the 2019 shareholders’ meeting season, investors expressed this concern for most bank leaders. Many banks announced its credit growth target from 12 percent14 percent accordingly, such as Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) at 12 percent, Military Joint Stock Commercial Bank (MB) at 14 percent, Asia Joint Stock Commercial Bank (ACB), Saigon Joint Stock Commercial Bank (SCB) at the same rate of 13 percent, VietinBank at only 6-7 percent and Vietcombank is up to 15 percent, in which VietinBank is considered to have problems with capital. According to Nghiem Xuan Thanh, the chair of Vietcombank, “Vietcombank has met Basel II one year earlier than the regulation, SBV gives priority to credit growth and network development. So far, among the banks assigned credit growth, Vietcombank has the highest increase, at 15 percent. ”
However, there are many banks still left open the possibility of adjusting credit growth targets much higher than the current level, along with another scenario of profit by credit activities contributing about 70 percent to the total revenue of banks.
For example, at Vietnam International Joint Stock Commercial Bank (VIB), the bank’s shareholders have approved a credit growth plan of up to 35 percent, including lending to customers and issuing valuable papers. Orient Joint Stock Commercial Bank (OCB) sets the growth target to 30 percent even though the current room is lower. VPBank plans to increase credit growth by 15 percent, Saigon Thuong Tin Joint Stock Commercial Bank (Sacombank) to 16 percent and Hochiminh City Development Joint Stock Commercial Bank (HDBank) to 24 percent. Tien Phong Joint Stock Commercial Bank (TPBank) expects the bank to be approved for credit growth target of over 20 percent for the whole year (only the first quarter of the bank’s growth rate reached 11 percent).
Among banks that open up the possibility of credit growth, the banks approved by SBV to apply Circular 41 on capital safety (the first pillar of Basel II) are VIB, OCB, TPBank, etc. It is not unusual for SBV to issue a message that it will give priority to credit growth targets and expand the network for this group.
The remaining banks have a room for growth or not depending on SBV, but banks that are restructuring or participating in restructuring other credit institutions may also have their own policies. And as analysed above, banks that have adjusted their credit growth targets will certainly have a significant impact on the yearly profit results.
Earlier in the year, taking part in the survey of the State Department of Statistics Forecasting, credit institutions expected an average credit growth of the whole industry this year about 15.27 percenthigher than the SBV’s credit target of 14 percent.
