Banks ask for higher credit quota to prepare for peak lending season

Despite a credit slowdown in the first half of 2020, some private commercial banks have still asked the State Bank of Vietnam (SBV) for a credit growth expansion to prepare for a peak lending season expected at the end of the year.

According to the SBV’s policy, it assigns an annual credit growth quota for each bank depending on business performance and bad debt ratios to control lending of the entire banking system and ensure money supply and inflation control as targeted by the Government.

Banks ask for higher credit quota to prepare for peak lending season

The credit growth in the first half of this year is only half of the same period of last year. SBV’s statistics showed banks’ mobilised capital increased by 5.31 percent while loans grew only by 3.45 percent in the period.

However, banks said loans often increase sharply at the end of the year when capital demands of both firms and individuals surge significantly to prepare for the country’s holidays and festivals.

According to finance expert Huynh Trung Minh, it is feasible for the SBV to loosen the credit growth limits for banks, but banks must ensure to lend to only effective projects.

SBV has also recently expanded credit growth limits for some banks with healthy business performance to boost the country’s economic growth. Techcombank, VIB, VPBank, TPBank and Sacombank were approved to raise their credit growth limits to 19-23 percent.

Despite the expansion, a report of BIDV Securities Company (BSC) estimated the credit growth of the entire banking system this year would be only 9 percent, compared with the 13 percent rate in 2019.

 

Banks have been reducing the proportion of lending to individuals and small- and medium-sized enterprises (SMEs) while focusing on large-sized businesses with good resistance against the COVID-19 pandemic, BSC noted.

Sharing the same view, Vietcombank Securities Company (VCBS) also said the SBV had loosened credit growth limits for some banks, but the credit growth of the entire banking system would be less than 10 percent in 2020.

Analysts from Saigon Securities Incorporation (SSI) estimated an even lower rate. SSI’s recent report on the outlook for the banking industry in the second half of 2020, forecast credit growth in 2020 could be around 7.5-8.5 percent.

According to them, the credit demand may continue to weaken as the country still suffered impacts of the pandemic while banks, especially large-sized ones, may not lower their credit granting standards.

VNA

Bad debts tend to rise despite slow credit expansion

Bad debts tend to rise despite slow credit expansion

Non-performing loans are still increasing despite slow credit expansion as the COVID-19 pandemic stretches many businesses to their limits.  

 
 

Other News

.
Thai billionaire, European brewer lose money in Sabeco investment deal
Thai billionaire, European brewer lose money in Sabeco investment deal
BUSINESSicon  16/10/2020 

The Sabeco price has seen a strong recovery in the last half a year, but is still at a low price. Both Thai billionaire and the big brewer Heineken have lost money because of the drop in Sabeco share price.

State firms more resilient than foreign, Vietnamese private companies: survey
State firms more resilient than foreign, Vietnamese private companies: survey
BUSINESSicon  15/10/2020 

Business resilience is highly correlated with level of digitisation, the Business Pandemic Resilience Diagnostic conducted by Grant Thornton...

Pandemic a test of fire for Vietnamese enterprises
Pandemic a test of fire for Vietnamese enterprises
BUSINESSicon  15/10/2020 

The COVID-19 pandemic has been a test for Vietnamese businesses as many have been and will be struggling to recover for the foreseeable future. 

Five expy projects unlikely to attract private investors
Five expy projects unlikely to attract private investors
BUSINESSicon  15/10/2020 

Although the National Assembly Standing Committee has given its approval to switch three of the eight subprojects of the North-South Expressway from the public-private partnership (PPP) format into wholly State-invested, 

Only 5% FDI projects in Vietnam use high technologies
Only 5% FDI projects in Vietnam use high technologies
BUSINESSicon  15/10/2020 

Vietnam is home to 32,539 valid foreign direct investment (FDI) projects with registered capital of a combined US$381 billion, of which US$233 billion has been fully disbursed.

The Vietnamese brain will decide
The Vietnamese brain will decide
FEATUREicon  16/10/2020 

"Vietnamese have nothing but brains to develop the country in the future." 

Vietnam banking sector to suffer in 2020 before rebounding in 2021
Vietnam banking sector to suffer in 2020 before rebounding in 2021
BUSINESSicon  15/10/2020 

Fitch Solutions expected credit growth to weaken to 7% in 2020 from 13.7% in 2019, but the growth is predicted to pick up to 12% one year later.

Realising revised growth ambitions
Realising revised growth ambitions
BUSINESSicon  15/10/2020 

Vietnam’s fourthquarter economic outlook is brighter on the back of a rise in domestic consumption and public investment.

Businesses line up for further support
Businesses line up for further support
BUSINESSicon  15/10/2020 

Continued facing with massive woes, the business community in Vietnam is in dire need of the government’s assistance for investors and enterprises to struggle through the global health crisis and grabbing new business

Infrastructure development at the centre of PPP decree direction
Infrastructure development at the centre of PPP decree direction
BUSINESSicon  16/10/2020 

Further clarifying the legal framework for infrastructure development via wider participation of private investors is expected to help the country attract more funding into the industry.

Gov’t support aids automobile industry
Gov’t support aids automobile industry
BUSINESSicon  14/10/2020 

The domestic automobile industry was forecast to thrive, given the Government’s supports in tax policies for imported automobile components coupled with the increasing income of citizens.

Digital economy and fintech see growth amid COVID-19
Digital economy and fintech see growth amid COVID-19
BUSINESSicon  15/10/2020 

The Prime Minister’s Economic Advisory Group met with the local fintech firm MoMo in HCM City on Monday.

Vietnam Airlines reports huge losses
Vietnam Airlines reports huge losses
BUSINESSicon  14/10/2020 

Vietnam Airlines Group, listed as HVN on the HCM Stock Exchange, earned nearly VND24 trillion (US$1.04 billion) in total consolidated revenue in the first nine months of this year, marking an estimated loss of VND10.75 trillion, 

Vietnam to increase imports of coal and gas
Vietnam to increase imports of coal and gas
BUSINESSicon  14/10/2020 

The latest data from the ministry sent to the National Assembly shows that Viet Nam is transitioning from an energy exporter to a net importer.

Coastal developers prepare for good upcoming times
Coastal developers prepare for good upcoming times
BUSINESSicon  14/10/2020 

In anticipation for the world eventually opening back up for travellers, developers are exploring the high potential of Vietnam’s world-renowned coastal urban areas.

Tax relief should not be “One size fits all”
Tax relief should not be “One size fits all”
BUSINESSicon  14/10/2020 

The Private Economic Development Research Board, under the Advisory Council for Administrative Procedure Reform, has proposed a 30% reduction in corporate income tax for all businesses this year.

Big investors pour money into IZ projects as land fund declines
Big investors pour money into IZ projects as land fund declines
BUSINESSicon  15/10/2020 

The land rent in some industrial zones in Hai Phong, Bac Ninh and Hai Duong has increased by 20-30 percent.

Vietnam urged to develop night-time economy
Vietnam urged to develop night-time economy
BUSINESSicon  14/10/2020 

Vietnam has missed some economic development opportunities and should not ignore the chance to grow the night-time economy, according to economist Tran Dinh Thien.

Tra fish swimming back to local market
Tra fish swimming back to local market
BUSINESSicon  14/10/2020 

Turning away from the uphill battle in exports due to COVID-19, tra fish producers have set an eye on the domestic market.

Investors find VN ports, logistics attractive
Investors find VN ports, logistics attractive
BUSINESSicon  13/10/2020 

With its annual growth of 12-14 per cent, the logistics sector, especially seaports, is becoming attractive to both domestic and foreign investors,...

 
 
 
Leave your comment on an article

OR QUICK LOGIN