Some banks still want to increase the credit limit, even though lending activities have not been improved much.
The lending interest rate for corporate customers has been lowered to the lowest level of 10 percent per year by many banks. But, credit growth of most banks still remains relatively low in the first seven months of this year.
Trinh Van Tuan, chair of Orient Commercial Joint Stock Bank (OCB)’s director board, said that in Jan-Jul, OCB’s credit growth was only 1 percent while its target for the whole year is 15%.
According to Tuan, with the difficult market situation, it is not easy to spur credit growth, and at the same time, it is also more and more difficult in competing to seek good customers.
Meanwhile, the lending interest rate at OCB has been gradually cut down to seasonable level. Currently, OCB is applying the lending interest rate for institutional customers in the sectors of export and import at only 12-13 percent per year. In addition, the bank also provides foreign currency loans at the interest rate of only 4.5-5 percent per year.
But, to be able to well prepare for a peak business season by the end of the year and with an expectation to pour capital to the market in the remaining months of this year, OCB still proposed the State Bank of Vietnam (SBV) to ask for more credit “quota”. “OCB has a plan to ask for the central bank’s approval to increase the credit limit this year to 25-30%,” Tuan said.
Tien Phong Commercial Joint Stock Bank (TienPhongBank) has recently also been approved to increase its credit growth to a maximum 27 percent basing on reviewing the operations in the first six months of this year.
According to Do Minh Phu, chair of TienPhongBank’s director board, credit of TienPhongBank grew slowly in the first quarter of this year because the lender focused all resources to restructure. In the second quarter of 2012, TienPhongBank’s total outstanding loans grew 6.8 percent from Q1.
“Therefore, in the remaining six months of this year, TienPhongBank will speed up lending activities to support enterprises and individuals in accessing capital sources in an easiest way”, Phu said.
Many banks expect credit balance will be better improved in the rest of this year, especially in the fourth quarter when companies start the peak business season. Thus, asking for more credit growth quota is considered necessary to boost lending activities by the end of the year.
Answering reporter of the local Newswire Bao Dau Tu (Vietnam Investment Review), Nguyen Huu Dang, general director of the HCM City Development Bank (HDBank) said that the bank’s credit growth in the first seven months of this year reached 8-9%. “With an expectation of more satisfactory credit growth in the last half of this year, HDBank proposed the central bank to raise its credit growth “room” this year from 10 percent to 17%”, Dang said.
Tran Phuong Binh, general director of Dong A (Eastern Asia) Commercial Joint Stock Bank (DongABank-EAB), said in Jan-Jul, due to slow credit growth, the bank mainly focused on restructuring and dealing with bad loans. Till the end of July, DongABank’s credit growth reached only 3-4%, relatively low against the whole year’s target of 15%.
However, according to Binh, the “bottom” level of lending interest rate at 12 percent per year currently is also considered appropriate for customers who are in need of capital to deploy feasible business projects.
“EAB does not give prominence to credit growth target but pays more attention to credit quality, so the bank’s credit “room” of 15 percent is appropriate for the bank this year”, said Binh.
Some specialists noted many banks are applying for additional credit growth quota, but with the current lending situation, the additional credit “room” is unlikely to be used.