Banks' credit target remains within reach

Banks' credit target remains within reach

With banks managing to increase credit in recent months, the year's growth target is appearing within reach.

According to a report tabled at a regular Cabinet meeting last month, as of July 25 credit growth had risen to 5.02 per cent, much higher than the 1.2 per cent increase in the same period last year.

But the year had started slowly, with growth at only 2.98 per cent after five months.

The quick surge in recent times has partly been due to a fall in interest rates from 11-12 per cent a year to 7-9 per cent, according to experts.

Besides, the State Bank of Viet Nam has taken measures to resolve the problems faced by companies and to boost lending.

In addition to a VND30 trillion (US$1.43 billion) credit package aimed at home buyers and property developers, the central bank has also launched lending packages for priority sectors like coffee.

It has been working to help set up the Viet Nam Asset Management Company, which will buy bad debts from banks.

As a result, credit growth at many banks has even surpassed the limits fixed by SBV, and they been forced to seek the central bank's approval for this.

SBV recently allowed MBB and NamA Bank to raise this year's lending growth cap to 20 per cent and 30 per cent respectively from the earlier 9 per cent.

Many banks, on SBV's instructions, have cut loan interest rates.

Techcombank, for instance, has unveiled a preferential lending programme with an 8.5 per cent interest rate for companies.

HDBank has earmarked VND1 trillion ($47.34 million) for preferential loans to individuals, business households, and private enterprises this year.

Borrowers of VND500 million and more will enjoy zero interest for the first month and be charged 11.86 per cent for the next 11 months.

For loans of VND200-500 million, the rate will be zero and 12.86 per cent.

Kieu Phuong, chief accountant at Ninh Binh Nitrogenous Fertilizer Company, said the lower lending interest rates would help the company optimise its operations.

A top official at Viet Duc Steel Joint Stock Company said Techcombank's preferential credit programme is good news for the company.

Scepticism

But many experts remain sceptical about the banking sector meeting the growth target.

Lending interest rates are unlikely to be cut further, so credit growth in the remaining months would not be a function of interest rates or liquidity, but of credit demand, they said.

The demand depends on economic growth and recovery by the manufacturing and services sectors, they added.

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