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| Credit growth slows down |
| 16/Mar/2010 Intellasia | Dau Tu |
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| 16 Mar, 2010 - 9:12:55 AM |
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Vietnam's credit growth has started to remain stand still from February and is unlikely to be increased in next months. Apart from the pressure of negotiated loan rates, the difficult capital mobilisation also caused obstacles in banks' credit operation.
Ly Xuan Hai, general director of Asia Commercial Bank (ACB) said that if the interest rate band is raised, the pressure will be heavier and customers will not eye bank loans. Presently, the negotiation based interest rates on medium and long term loans at ACB stand at around 16 percent/year, and 17.5 percent pa at highest (as for individual customers) but the bank's credit growth remains slow, Hai told.
Tran Van Vinh as general director of Orient Commercial JS Bank (OCB) says, “After two months we can evaluate the impacts of State Bank of Vietnam's (SBV) decision allowing banks to apply negotiation based lending rates. But with the current ceiling deposit rate mechanism, this bank finds it hard to find out medium and long term savings sources to develop credit”.
In a current meeting with Vietnam Banks Association (VNBA) and its members in HCM City, banks proposed to abolish the ceiling deposit rates. Although SBV announced it would continue inspection over the banks that have deposit rates higher than the ruled ceiling level, banks still are offering promotions to depositors.
Typically, DaiA Bank has launched the programme "Presenting SJC gold and prizes" whereby customers with the longer one month deposits of 25 million dong can join the programme. The lowest prize is 35,000 dong and the highest one is three tenth of a tael of SJC gold. Depending on deposit value and depositing time, depositors will be presented a corresponding amount of SJC gold and bonus.
However, banks said that increasing idle capital in this context is very difficult. Factually, the negotiated deposit rates between banks and depositors surpassed SBV's ceiling level, leading to the unhealthy competition among banks.
A bank representative said in a statement that deposit rates are gradually losing attractiveness prior to the risk of inflation breakout.
"Capital mobilisation in the months after Lunar New Year generally nearly did not increase. Customers only deposit money in short terms (306 months) while banks are allowed to use only 30 percent of short term capital to lend medium and long term loans according to current regulations," Vinh added.
Banks now are boosting lending in order to realise the 2010 profit plan because banks' profit mainly comes from credit operations. Therefore, banks started to focus more on individual credit segment including securities backed loans and property backed loans.
ACB is still providing securities mortgage loans based on selecting share codes for collaterals. With the surplus of spare capital of 30 trillion dong, ACB will enhance credit support to customers.
One financier proposed SBV should eliminate the ceiling deposit rates.
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