Experts have suggested that it is necessary to have an agreement between banks and enterprises to decrease bad debt rates and unfreeze credit.
Leaders of banks said that from now till the end of this year, banks will gradually cut down loan interest rate with a hope to disburse more capital. However, specialists in the financial and monetary field said that a consensus between banks and enterprises is necessary to be able to decrease bad debt rate and unfreeze credit.
Right after the State Bank had an official decision to decrease 1 percent per year for key interest rates; commercial banks began to drop loan interest. For example, the interest rate of three first months for VIB’s customers to buy or repair their houses is 9 percent per year.
According to Pham Thien Long, deputy director of HDBank, in comparison with the first months of year, the current loan interest rate has significantly decreased, even faster than the one in customers’ hope. However, enterprises now are meeting serious difficulties in selling and returning old loan, while their collaterals cannot be used to make business loans. The increase in bad debts cause banks’ credit activities clustered. However, according to Long, in the current context, the credit quality is being put in the forefront to limit risks of bad debts.
Sharing the view with Long, Tran Phuong Binh, general director of DongA Bank said that the guideline of DongA Bank is to focus on supplying loan for their old customers, making plans on possible production and business plans. The loan interest of DongA Bank dropped significantly to 12 – 13 percent per year applicable to enterprise customers and 13 – 14 percent per year to individual customers.
However, DongA Bank is one of the banks with the high loan interest in real estate field, accounting for 26 percent of total loans by the end of 2011, so it is very difficult to
The statements of macroeconomic analysis and the prospect in Vietnam market in July 2012 of HSBC showed that although the interest rates decreased, the increase in credits is still low due to low requirements and enterprises’ inability to mortgage their assets for loan. HSBC reported that despite low interest rates, the amount of money pumped through the open market is very little. The credit in the economy has decreased 0.6 percent from the end of 2011 to April 2012. It means that the increase in credit has the possibility to reach 13 percent this year in spite of the State Bank’s efforts in borrowing promotion.
The report of National Financial Supervisory Commission also shows that the increase in credit by June 12 has been improved in comparison with some prior months and has escaped from the negative status, but has not brought significant results.
However, in accordance with the estimate of National Financial Supervisory Commission, the capital absorptive capacity of enterprises is still low, bad debts in banks and the arrears in the economy are rather high; which makes credit hardly increase strong from now to the end of year. Therefore, the increase in outstanding of the entire bank this year may reach 8 percent and this increase affects the investment plans of the society reaching 33.5 percent GDP.
Tran Du Lich, a member of the National Advisory Council on Financial and Monetary Policy, opined that “the credit growth of the entire banking system can only reach about 10 percent by the end of this year, instead of the credit growth target of 15 – 17 percent previously”.
According to his ideas, the resolution for the problems of credit increase is to find the common voice between banks and enterprises. When raising capital, banks have to the output to solve the capital problem. So, banks need enterprises and if enterprises “die”, banks are difficult to “live”.
To find the common voice between banks and enterprises, both sides need to build the mutual trust. Banks must have good management capacity, and enterprises need to build the prestige with banks. Banks are willing to give capital to enterprises, even without the collaterals when two sides understand each other.
From the beginning of the year so far, the loan interest rate has been chopped for four times and according to ANZ, the State Bank of Vietnam (SBV)’s moves to ease the monetary policy will have been being applied in the future. In the last six months, the economic growth rate is expected to be faster. However, due to objective factors such as the difficulties in the global growth environment and the still low expansion rate of domestic credit, the GDP growth target of 5.5 percent in 2012 will encounter many challenges.