Sharing with Nguoi Dong Hanh, Head of Credit Department under the State Bank of Vietnam (SBV) Nguyen Quoc Hung said that the SBV has raised the credit growth limit for some banks. According to Hung, all banks asking for more credit growth room are approved, said Hung.
In this period, four state-owned banks (Commercial Joint Stock Bank for Agriculture and Rural Development (Agribank), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), and Commercial Joint Stock Bank for Investment and Development of Vietnam (VietinBank) did not propose for more credit growth room. Hung said that these banks are still struggling with disbursement so they did not require more room. After the first six months of the year, they still have room for compared to the target set at the beginning of the year.
The leader of the Credit Department said that the level of extension depends on the financial capacity and capital structure of each unit, in line with the orientation to ensure system safety. “Banks must ensure capital balance between mobilisation and lending. The capital source needs to be built from market 1 and should not depend on market 2,” said Hung.
On the other hand, capital mobilisation should also be based on a low-interest rate basis. Banks are not allowed to increase deposit interest rates because the SBV’s policy is to provide a basis for lowering interest rates. Hung said that based on the classification of banks, the SBV will approve appropriate credit growth limit.
On the other hand, the fact that the SBV is loosening credit growth targets for credit institutions (CIs) is reasonable, but banks must ensure efficiency when borrowing. In order to have efficient lending and recover capital, banks should find effective projects to make disbursement.
In the context when credit output remains difficult as at present, Hung also said that banks may no use up the additional credit growth room granted by the SBV.
As of June 29th, the credit grew by 3.26 percent compared to the beginning of the year while it was 7.33 percent in the same period of 2019. According to the head of Credit Department, the current credit growth is still largely dependent on the big 4 banks. The impact of small and medium-sized enterprises, in terms of absolute value, is not significant like the big 4 state-owned banks. For example, if Agribank’s credit grows by one percent, its outstanding loans will increase by 10 trillion dong.
At the meeting with localities to assess the socio-economic situation in the first six months of the year and to carry out the tasks in the last six months of 2020, the SBV’s Governor Le Minh Hung said that the SBV will proactively adjust the credit growth limit of numerous commercial banks. Banks will be able to direct credit into areas which serve the economic growth.
Leader of many banks are eager for more credit growth room as their credit growth rates have almost reached the set target after the first six months of the year. For example, CEO of Vietnam Prosperity Commercial Joint Stock Bank (VPBank) Nguyen Duc Vinh once shared that in early June that the bank has used up most of the credit growth room and requested for more. Nguyen Hung, CEO of Tien Phong Commercial Joint Stock Bank (TPBank) said at the bank’s 2020 annual general meeting that as of April 2002, the bank’s credit growth rate was 11 percent and is only 0.5 percent from the credit growth assigned by the SBV. Hung also expected the SBV to assign more credit growth.
