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VN private banks ask for higher credit quota

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The credit growth of the entire banking system is estimated at less than 10 per cent in 2020. Photo VPB/VIET NAM NEWS/

VN private banks ask for higher credit quota

Despite a credit slowdown in the first half of this year, some private commercial banks have still asked the central bank, the State Bank of Vietnam (SBV) for a credit growth expansion to prepare for a peak lending season expected at the end of the year.

According to the SBV’s policy, it assigns an annual credit growth quota for each bank depending on business performance and bad debt ratios to control lending of the entire banking system and ensure money supply and inflation control as targeted by the government.

The credit growth in the first half of this year is only half of the same period of last year. SBV’s statistics showed banks’ mobilised capital increased by 5.31 per cent while loans grew only by 3.45 per cent in the period.

However, banks said loans often increase sharply at the end of the year when capital demands of both firms and individuals surge significantly to prepare for the country’s holidays and festivals.

Finance expert Huynh Trung Minh said it is feasible for the SBV to loosen the credit growth limits for banks, but they must ensure to lend only to effective projects.

SBV has also recently expanded credit growth limits for some banks with healthy business performance to boost the country’s economic growth. Techcombank, VIB, VPBank, TPBank and Sacombank were approved to raise their credit growth limits to 19-23 per cent.

Despite the expansion, a report of BIDV Securities Company (BSC) estimated the credit growth of the entire banking system this year would be only nine per cent, compared with the 13 per cent rate last year.

Banks have been reducing the proportion of lending to individuals and small- and medium-sized enterprises (SMEs) while focusing on large-sized businesses with good resistance against the Covid-19 pandemic, BSC noted.

Sharing the same view, Vietcombank Securities Company (VCBS) also said the SBV had loosened credit growth limits for some banks, but the credit growth of the entire banking system would be less than 10 per cent this year.

Analysts from Saigon Securities Incorporation (SSI) estimated an even lower rate. SSI’s recent report on the outlook for the banking industry in the second half of this year, forecast credit growth in 2020 could be around 7.5-8.5 per cent.

The analysts said the credit demand may weaken further as the country continues to suffer impact stemming from the pandemic while banks, especially large-sized ones, may not lower their credit granting standards.

VIET NAM NEWS/ASIA NEWS NETWORK

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