Banks running out of credit growth limit to receive extension

19-Jun-2021 Intellasia | Dien dan Doanh nghiep | 5:02 AM Print This Post

The State Bank of Vietnam (SBV) said that according to proposals of credit institutions (CIs), the agency is reviewing and evaluating in order to grant more credit growth room to banks that have run out of “room”. Nguyen Tuan Anh, director of the Credit Department for Economic Sectors, said that the SBV bases on the scale and asset quality of each CI to rank A, B, C, etc. and assign flexible credit growth targets.

It is known that the SBV has assigned credit growth limits to CIs in the system in 2021. Accordingly, the group of state-owned banks including Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), and Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) were granted a credit growth limit of 6.5 7.5%, and Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) was granted a limit of 10.5%. The credit growth room is 8.5 9.5 percent for some private joint stock banks such as Vietnam International Commercial Joint Stock Bank (VIB), Asia Commercial Joint Stock Bank (ACB), Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), and 10.5 12 percent for Military Commercial Joint Stock Bank (MB), Vietnam Prosperity Commercial Joint Stock Bank (VPBank) and Vietnam Technological and Commercial Joint Stock Bank (Techcombank). Overall, the credit growth room assigned by the SBV to CIs is lower than last year.

The SBV said that the credit growth in the first quarters of the year is often lower than the last months of the year. Experts forecasted that the credit growth this year is also no exception to this rule.

However, at present, the economic context has seen certain changes. In the last six months of the year, when the epidemic is under control and credit is expected to increase again, the credit growth limit granting of the SBV may change This is a matter of concern to banks.

In 2020, the credit growth saw a strong differentiation among bank groups. While some banks recorded high growth rate of over 20 percent such as Techcombank (23.3%), some CIs credit growth of less than 10 percent such as Vietnam Thuong Tin Commercial Joint Stock Bank (VietBank, 9.5%), Petrolimex Group Commercial Joint Stock Bank (up by 8.3%), Saigon Commercial Joint Stock Bank for Industry and Trade (6.1%), etc.

In 2021, the SBV aims at a credit growth of the entire industry of about 12 percent and specific limit is allocated to each bank, depending on its operational capacity. However, in the long term, experts said that the SBV should consider between granting credit growth room on a quarterly basis and managing according to the Capital Adequacy Ratio (CAR).

Recently, Viet Dragon Securities Company (VDSC) forecasted that the group of private joint stock banks will maintain positive credit growth in Q2. Despite being affected by the pandemic, VDSC still believes that the outstanding credit of these banks will be maintained at the assigned credit growth ceiling limit.

According to Tuan Anh, based on the economic growth and inflation targets in 2021 set at the beginning of the year, the SBV has developed a credit-oriented target for the whole year 2021 and this will be adjusted in accordance with developments and actual situation. The SBV has directed CIs to continue carry out many solutions to remove difficulties for people and businesses hit by the Covid-19 pandemic, in the spirit of companionship and sharing.

As of April 16th, the credit growth of the economy was 3.34 percent compared to the end of 2020. CIs have drastically taken measures to support people and businesses to overcome the difficulties caused by the Covid-19 disease. By April 5th, CIs had restructured debt repayment terms for 262,000 customers with outstanding credit of about 357 trillion dong; exempted and lowered interests for over 663,000 customers with outstanding credit of 1,270 trillion dong; and offered new loans at preferential interest rates with accumulated sales reaching more than 3,160 trillion dong to 456.600 dong.

 

Category: Finance, Vietnam

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