Banks’ credit growth remains sluggish

Banks’ credit growth remains sluggish

While some banks have obtained high credit growth in recent months, others are still struggling to boost lending to meet this year’s credit growth targets.

Sacombank in its first-half business report posted a credit growth rate of 12.9% against late 2012, Military Bank with 7.6%, Navibank with 8.8% and OCB with 6.2%. Meanwhile, other banks, including large lenders, saw modest credit growth during the period.

Vietcombank reported a 1.6% decline in credit in the first six months of 2013. Its dong credits increased 5% but dollar loans tumbled by 17% compared to the end of last year.

The bank has seen a mild improvement since early July, with credit down 0.2% as of the end of the month. This problem also cut into the bank’s profit by around 10% against last year.

Vietinbank also reported no credit growth in the first six months and the figure just bounced back in July.

Pham Huy Thong, deputy general director of Vietinbank, said that as the bank focused on operation restructuring and debt quality improvement in the first six months, it reported low credit growth in this period.

Eximbank, meanwhile, posted credit growth of nearly 4% in the Jan-Jun period, which was lower than the same period of 2012 but a positive figure compared to the level of 0.03% at the end of the first quarter. With this rate, the bank’s credit growth target of 15% looks impossible.

A leader of Eximbank said that banks find it hard to boost lending now as capital demand of the economy is very low. Lenders are in tough competition as the number of qualified borrowers is small.

Strict lending requirements are also the cause of Eximbank’s low credit growth. Meanwhile, retail banking is not a strength of Eximbank, individual loans do not make a big contribution to total credit growth of the lender, the banker said.

According to the director of a large commercial bank branch, many potential corporate customers are still discussing interest rates with this bank and they only accept low rates.

Having got lower lending rates offered by other banks, some customers have taken the new loans to close the credit contracts at his bank. Therefore, the branch has always seen poor credit growth, he said.

Explaining strong credit growth at some banks, Vietcombank Securities Company in a report said that four giants Vietcombank, BIDV, Vietinbank and Agribank have not reported high credit growth over the past four months while smaller lenders have reported positive figures, suggesting that small banks such as Sacombank and ACB have sped up consumer credits.

This explains why HSBC Bank’s Purchasing Managers’ Index (PMI) dropped back sharply in June. Credits have yet to run into the production sector as they mainly have been offered to consumers, the report said.

Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said the high credit growth rates at small and medium banks indicated that the economy had yet to really recover.

The situation may improve in the final months of this year given falling interest rates and stronger liquidity. However, it is hard to raise credits as bad debt is moving up at most banks, Minh said.

vietnamnet