VietNamNet Bridge – Some commercial banks have got the go-ahead from the State Bank of Vietnam (SBV) to raise the ceiling credit growth rates to 25-30 percent, instead of the 0-17 percent rates fixed earlier this year. However, this is not enough to be optimistic about the lending.

Tien Phong Bank, Ocean Bank have been allowed to raise the ceiling credit growth rate to 27 percent in 2012, while the Military Bank to 25 percent, VP Bank and HCM City Housing Development Bank to 30 percent.

However, analysts believe that face of the credit market would not change a lot because of the decisions.

The market shares held by the groups of Vietnamese medium-class banks and foreign banks which have been given more “quotas” for credit growth, remain very modest, just 8 percent. Therefore, even though if the banks obtain the allowed ceiling credit growth rates this year, they would not be powerful enough to have big impacts on the market.

Analysts of the Saigon Securities Incorporated (SSI) have commented that the lifting of the ceiling credit growth rates would help encourage small banks to push up lending.

However, this would not help improve the current situation. The capital flow still gets stuck not because banks do not have “quotas” for credit growth, but because businesses remain eligible for loans.

“The percentage credit growth does not have much significance. The key to the question is the credit volume increases,” a senior executive of Vietcombank said, explaining that it would be easy for a small bank to increase the outstanding loans from 1 trillion to 2 trillion dong, but it would be unfeasible for a big bank to increase the outstanding loans from 300 trillion dong to 600 trillion dong.

The senior executive has also warned that though some banks have more quotas for credit growth, this does not mean that they would use up the quotas.

“It would be really very difficult to obtain the credit growth rate of 8-10 percent this year for the whole banking system,” he said.

The banker has every reason to say so. Currently, the banks holding the biggest credit market shares, still report very slow credit growth.

According to Vietcombank Securities Company VCBS, Vietcombank’s outstanding loans had grown by 3 percent by the end of June 2012. The bank’s executive think that the 15-17 percent credit growth target set up earlier this year may be unattainable.

“The 10 percent credit growth rate would be seen as a success for us,” an executive said.

Also according to VCBS, Vietinbank, one of the biggest banks in Vietnam, saw the minus (-) 3.1 percent growth rate in the first six months of the year.

Sacombank also had the minus 1.9 percent growth rate in the first half of the year, though its mobilized capital increased sharply by 9 percent. Eximbank’s outstanding loans increased slightly by 0.97 percent, while the mobilized capital increased by 16.8 percent.

No sign of the credit improvement has been found. Sources have said that the credit growth rate of the whole banking system by the end of August was 1.4 percent.

Hong Phuc