So far, about 26 out of 31 joint stock banks have announced their business plan for 2019, and some banks even approved this plan at the Annual general Meeting (AGM). The outstanding credit of these 26 banks by the end of 2018 reached about 5.279 trillion dong, accounting for nearly 80 percent of the credit market share of the whole system.
Notably, most banks are optimistic, even some set very high credit growth targets this year. Accordingly, among the 26 surveyed banks, 16 banks targets higher credit growth than the 14 percent set by the State Bank of Vietnam (SBV) for the entire system.
Leading this group is Vietnam International Commercial Joint Stock Bank (VIB) and Maritime Commercial Joint Stock Bank (MSB) when raising the ambition to expand credit by 35 percent in 2019; followed by Orient Commercial Joint Stock Bank (OCB) with 30 percent. Banks aiming a more than 20 percent credit growth this year include three names: HCM City Development Commercial Joint Stock Bank (HDBank) with 24 percent, Tien Phong Commercial Joint Stock Bank (TPBank) with 20 percent and Southeast Asia Commercial Joint Stock Bank (SeABank) with 20 percent.
However, the most notable name is Vietnam Thuong Tin Commercial Joint Stock Bank (VietBank). Although the SBV limits VietBank’s outstanding credit at 37.590 trillion dong by the end of 2019, equivalent to only 5.9 percent increase compared to the end of 2018. Nevertheless, VietBank has made two more backup plans. In the most ambitious plan, the bank will have an outstanding credit of 51 trillion dong by the end of 2019, up by 43.7 percent.
However, since the above mentioned banks are all small and medium-scaled ones with credit scale of only a few dozens of trillion dong, the level of contribution to the overall credit growth is insignificant. Ten remaining banks in the group only aim to develop credit by 15 percent to 18 percent. These banks include big names such as Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), which expects to grow credit by 15 percent to 735.275 trillion dong; Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) with target of 16 percent, reaching 298.100 trillion dong; Saigon Hanoi Commercial Joint Stock Bank with target of 16.65 percent, reaching 261.592 trillion dong, Vietnam Prosperity Commercial Joint Stock Bank (VPBank) with target of 15 percent, reaching 265.408 trillion dong; Military Commercial Joint Stock Bank (MB) with target of 15 percent, 246.036 trillion dong, etc.
Thus, only 10 banks set credit growth targets below the limit set by the SBV. However, the average credit growth in 2019 of the above 26 banks is only 13.6 percent, lower than the SBV’s limit, because two state-owned banks which are Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV) and Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) only target fairly low credit growth rates of respectively 12 percent and seven percent. As the credit scale of these two giants accounts for up to 40 percent of the market share of 26 banks, it significantly pulls down the average growth rate.
According to statistics of the SBV, the credit growth in the first months of the year was fairly sluggish. By April 17th, the credit increased by 3.23 percent compared to the end of 2018, much lower than the 4.3 percent recorded in the same period of 2018.
Financial statements of banks also showed that by the end of the first quarter of 2019, beside some names which posted high credit growth such as TPBank (9.77 percent), OCB (8.53 percent), MB (6.75 percent), Vietcombank (6.55 percent), etc., some other banks recorded very modest credit growth rates; two banks even recorded negative credit growth, including VietinBank with negative 0.44 percent and Export Import Commercial Joint Stock Bank (Eximbank) with negative 2.9 percent.
That made many experts worried that the 14 percent credit growth target set by the SBV this year may not be achieved, even though it is the lowest growth rate in recent years.
Talking about this goal, Dr Nguyen Tri Hieu a banking and finance expert, said that the 14 percent credit growth goal, despite being low compared to the previous years, is consistent with reality, because banks in this time need to focus on the issues of internal consolidation and capital structure in order to operate effectively and healthily.
The credit growth target of 14 percent or even lower is also recommended by international organisations, especially IMF, when the credit scale of Vietnam has reached more than 130 percent of the general Domestic Product (GDP). If high credit growth as in the last few years is maintained, the banking system and even the economy are facing more risks.
The SBV has been consistent with this target despite the relatively low credit growth in the first few months of the year. Pham Thanh Ha director of the Monetary Policy Department of the SBV said that the agency set the credit growth goal for the entire 2019 at 14 percent and will adjust accordingly to the actual situation, but still base on the economic growth target of 6.8 percent and average inflation growth of less than four percent this year.
The movements in the first few months of the year have not fully reflected this year’s credit picture. Particularly, the SBV has sent some signals about extending the deadline to apply the Basel II standards, more or less reducing the pressure of raising capital for banks. “With the optimistic business plans set out by banks, the credit growth goal will surely be achieved, and even exceed the target if the economy does not suffer any major external shock such as the escalating and spreading trade war which affects exports and domestic production”, said an expert.
