After the first nine months of the year, many banks saw high credit growth of 20-20 percent. Typically, Vietnam Technological and Commercial Joint Stock Bank (Techcombank) announced an outstanding credit increase of 28.5 percent, reaching 205.317 trillion dong by the end of September 2019, the highest growth rate among banks. According to the financial report of Vietnam International Commercial Joint Stock Bank (VIB), the bank’s lending to customers grew by 28 percent to 123.223 trillion dong, equivalent to 90 percent of the plan set at the beginning of the year. Many other banks also recorded more than 20 percent growth in outstanding loans, such as Orient Commercial Joint Stock Bank (OCB), Tien Phong Commercial Joint Stock Bank (TPBank), etc.
Talking to Nguoi Dong Hanh newspaper about the above development at some banks, Nguyen Quoc Hung, director of Credit Department of the State Bank of Vietnam (SBV) said that most banks which recorded high credit growth have not very large size of total assets. The impact of each bank’s credit growth on the system will depend on the absolute growth of outstanding loans.
“Some small banks expanded outstanding loans by up to 30-40 percent, but the absolute increase was only one to two trillion dong, thus the impact on the system is insignificant. That is in contrast to large banks, such as Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank), for a 10 percent credit growth rate, the outstanding loans of the system will increase by 100 trillion dong,” said Hung.
Statistics by the end of June showed that Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Agribank, Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) and Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) remained the four banks with the largest total assets in the system, reaching above 1,100 trillion dong. Considering outstanding loans, BIDV ranked the first with 1,065 trillion dong; followed by Agribank with more than 1,050 trillion dong. Banks such as Techcombank, Asia Commercial Joint Stock Bank (ACB), Military Commercial Joint Stock Bank (MB), Saigon Hanoi Commercial Joint Stock Bank (SHB), etc. are in the middle-level group in terms of total assets, reaching around 40 trillion dong.
Hung added that in the first three quarters of the year, large banks such as Agribank, VietinBank only increased credit by about six percent, “a low level”, according to Hung.
Regarding the credit growth limit assigned by the SBV for each bank, according to the leader of Credit Department, the approved credit growth limit includes lending, bond investment, guarantees, etc. The specific growth rate of each bank was considered based on the financial situation and many factors.
For banks that meet the Basel II standards, in principle, each of them is free to make decision on credit growth. However, at present, the SBV still needs to control and makes adjustment to suit the macro economy, control inflation and consider the overall effect on the growth rate of the whole system.
The leader of the Credit Department said that no bank has exceeded the limit approved by the SBV, adding that any bank that exceeds the limit will be dealt with, because this is controlled by the SBV.
In 2019, the SBV has taken actions to control the credit flows to the economy by setting an industry growth target at 14 percent, lower than 2018. However, after half a year, as some banks hit the ceiling credit growth limit and some other banks recorded low credit growth, the SBV has made some “green light” actions by loosening the limit for some banks. The credit growth limit of ACB, MB, Techcombank was raised from 13 percent to 17 percent, and that of Vietnam Prosperity Commercial Joint Stock Bank (VPBank) was increased from 12 percent to 16 percent.
Banks with credit growth extension all recorded sharp increase in outstanding loans in the third quarter of the year. Typically, Techcombank lent out 20 trillion dong, equivalent to 12 percent; while VIB increased by more than 36 trillion dong of outstanding loans, equivalent to 19 percent.
Hung said that credit target loosening issue is being considered based on many factors. “Banks are proposing to get higher credit growth room, but the SBV must put in the general context, based on the reality of the economy, system safety and on the capital source, liquidity and Capital Adequacy Ratio (CAR) of each unit,” said Hung.
Banks that want to improve capital source by raising deposit rates will not be given higher credit growth limit and may be reconsidered. Hung said that banks that want to get higher credit growth room must ensure CAR, liquidity safety, control bad debts and clear all the debts at Vietnam Asset Management Company (VAMC), and self-manage many other factors.
On the market, from mid-August, the deposit rates of medium and small-scaled banks have tended to rise. The interest rates for terms of more than six months have been raised to the highest level of 8.5-nine percent per annum. In addition, many banks issued certificates of deposits with interest rates reaching nine to 10.2 percent per annum on long terms, such as Saigon Hanoi Commercial Joint Stock Bank (SHB), Viet Capital Commercial Joint Stock Bank (VietCapitalBank), etc.
In general, Hung affirmed that the limits at each bank will be fairly considered, ensuring equal basis and system sustainability.
According to the SBV’s information, as of October 4th, the credit of the entire economy reached more than 7,859 trillion dong, up by 8.95 percent compared to the beginning of the year. Meanwhile, in the first nine months of 2018, statistics of the general Statistical Office showed that the credit growth was 9.52 percent. By early October 2018, this number was 10.5 percent, as announced at the regular government’s press conference.
