The State Bank of Vietnam (SBV) has extended the credit growth limits for the third time this year to some commercial banks to meet rising capital demands at year-end.
According to a report from the Bank for Investment and Development of Vietnam’s Securities Company (BSC), 11 banks have been given permission to increase their credit growth limit.
TPBank has the highest rising rate of six per cent, from 17.4 per cent to 23.4 per cent, thanks to its strong capital adequacy ratio (CAR) according to Basel II standards and diverse investment portfolio.
In addition to TPBank, a number of other banks were allowed to expand their credit room by roughly four-to-five per cent, including Techcombank (from 17.1 per cent to 22.1 per cent), MSB (from 16 per cent to 22 per cent) and MB (from 15 per cent to 21 per cent).
Credit room of VIB and VPBank was also expanded from 14.1 per cent to 19.1 per cent, and from 12.1 per cent to 17.1 per cent, respectively.
The SBV stated in its monetary policy management solutions for the last three months of the year that it will periodically assess and modify credit growth objectives for each bank based on its operational status, financial capacity and stability of credit expansion.
According to SBV Credit Department head Nguyen Tuan Anh, credit growth rates were granted based on the particulars of each bank.
Moreover, banks that do not focus on hazardous and vulnerable businesses, with favourable interest rates are gaining the upper hand in terms of credit quota.
As a result, credit institutions that lower lending interest rates to support affected clients will be given priority consideration.
At the beginning of 2021, the SBV outlined three credit growth scenarios for the year.
The first scenario posits widespread Covid-19 vaccine coverage and the containment of the pandemic. This could see credit increases of 12-13 per cent, perhaps even 14 per cent.
In the second scenario, if the pandemic lasts until June, social distancing measures are still in place and vaccination rollout is prolonged, the rate could stand at 10-12 per cent.
The third scenario suggests that credit growth could be at seven-to-eight per cent if the pandemic lasts through the end of the year.
According to Anh, events so far are most similar to the third scenario as Vietnam suffers from the fourth outbreak of the Covid-19 pandemic.
However, credit growth in the first half of the year was far beyond the SBV’s expectation thanks to modest loan interest rates. As of June 21, the growth rate was 5.47 per cent, considerably higher than the 2.45 per cent over the same period last year.
The Asia Commercial Bank’s Securities Company forecast credit growth this year to be at 14 per cent, equivalent to the highest rate in the best-case scenario, noting that it may even reach 15-20 per cent among private banks.
ACB expects that credit demand will stay strong and credit growth will remain high in the second half of 2021, especially during the fourth quarter.
VIET NAM NEWS/ASIA NEWS NETWORK