VietNamNet Bridge – Commercial banks have been trying every possible means to increase the lending, as they only have three more months to obtain the targeted credit growth rate of 12 percent.

Big banks target small clients

Vietcombank, one of the Vietnamese biggest commercial banks, has decided to extend the program on lending individuals and business households at the preferential interest rate of 8 percent to December 31, 2013.

After six months of implementing the program, the bank has disbursed VND2.6 trillion.

A report of the bank showed that by the end of September, its credit growth rate, including the outstanding loans and the investments in corporate bonds, had reached 5.1 percent, a satisfactory result if compared with the minus growth rate by the end of June.

The move by Vietcombank, is quite a surprise in the eyes of analysts, who noted that the bank previously was known as a wholesale bank.

The fact that such a big bank now also targets private businesses, small enterprises and tiny business households showed that it has geared up to push up the lending.

Ocean Bank is now running a program called “Mua vang kinh doanh” (golden business season), under which the preferential interest rate of 8.5 percent is applied to small and tiny enterprises and business households.

The bank believes that the capital demand from the subjects has been increasing as they need to prepare for the year-end production season.

Tien Phong Bank has announced that from now to December 31, 2013, it would disburse VND2.5 trillion worth of capital at preferential interest rates. Borrowers can borrow the sums of money equal to 90 percent of the contract value in dong or dollars.

The preferential interest rates from 9 percent per annum for dong loans and 4.8 percent for dollars have been offered for the first three months. The bank will set up the lending interest rates for every specific case.

Especially, enterprises would enjoy the exemption or reduction of the remittance service fee, depending on the disbursed sums of money.

Banks pour more money into corporate bonds

A State Bank’s report showed that the mobilized capital by September 18 had increased by 11.74 percent, while the outstanding loans of the whole banking system had increased only by 5.83 percent.

Commercial banks, which have profuse idle capital, tend to pour more money into corporate bonds, the thing that did not occur in 2012.

Prior to that, banks injected their money in government bonds, which was a temporary solution to the excessive capital, but did not bring profits.

Since banks rushed to buy government bonds, the bond yield decreased dramatically to below the deposit interest rate (7 percent per annum).

Corporate bonds have become the most profitable investment channel for now. Big enterprises offer the high interest rate of 11-12 percent per annum for the first year. The interest rates of real estate firms’ bonds, which are believed to have higher risks, may be as high as 14 percent per annum.

In 2012, though enterprises offered the sky high interest rate of 18 percent for the first year, the bond sales were still below expectations. In the most successful bond issuance campaign, only VND2 trillion worth bonds was sold.

Commercial banks, which once kept cautious with corporate bonds despite the high interest rates, now decide to buy corporate bonds at the much lower interest rates.

The fund management company belonging to a state owned bank reportedly is preparing to set up a VND100 billion investment fund to specialize in investing in corporate bonds.

Compiled by C. V