Banks expect higher credit growth limits

More commercial banks expect their credit growth limits to be expanded this year after Techcombank became the first to get the nod to do so from the State Bank of Vietnam (SBV) recently.
banks expect higher credit growth limits

Vietcombank has almost reached its credit growth quota for 2018. (Source: Vietcombank)

Nguyen Le Quoc Anh, General Director of Techcombank, said that the bank had recently been allowed to raise its credit growth limit from 14 percent to 20 percent this year. As a result, Techcombank will be permitted to lend an additional VND6-VND8 trillion (US$256.41-US$341.88 million) in the last months of 2018.

The move is good news for banks as the last quarter of the year is often the peak lending season while many banks have already hit their credit growth quotas for 2018. At the beginning of the year, the SBV set a credit growth limit for each commercial bank - ranging from 12%-16% this year - depending on the bank’s health.

According to analysts, the expansion of the limit was due to credit growth in the entire banking sector reaching just 9.89% as of early October, much lower than the 11.73% rate recorded a year earlier.

The low rate threatened the Government’s full-year credit growth target of 17 percent, especially when many major banks had almost used up their credit quotas.

Ten major banks such as Vietcombank, HDBank, MB, Vietinbank, BIDV, VIB and VPBank had nearly reached their credit growth limits in the first nine months of the year.

However, it is forecast that only several banks would be allowed to extend their credit limits depending on their financial status and handling of bad debt. In the case of Techcombank, it was among the few banks to have cleared all its debts with the Vietnam Assets Management Company (VAMC), and had a capital adequacy ratio (CAR) of 14.33%, much higher than the standardised ratio.

The SBV’s decision to expand credit growth limits for some banks in 2018 had also raised concerns about rising inflation.

Nguyen Tien Thoa, Chairman of the Vietnam Appraisal Association, said that the loosening of credit growth would certainly affect inflation, however, the level of the impact would depend on the total amount of additional credit and the time of disbursement.

Thoa said the SBV should be cautious as the country’s consumer price index had nearly reached the 4 percent target set for 2018 while prices of goods and services had shown no signs of falling.

In Directive No. 04/CT-NHNN issued in August, the SBV instructed credit institutions to strictly control the pace and quality of credit of the whole banking system. The central bank indicated it would not consider adjusting credit growth limits up for commercial banks (except in special cases, such as those involved in restructuring weak credit institutions scheme in 2018).

Relating to the policy on allocating credit quota to each bank, Tran Du Lich, a member of the National Monetary Policy Advisory Council, said that in the short run, the SBV could not allow commercial banks to freely decide on their own credit growth and should apply administrative intervention to ensure the country’s macroeconomic stability.

However, in the long term, the SBV should abandon this credit policy and control credit based on banks’ CARs to match international practices while still controlling banks’ capital flows, Can Van Luc, chief economist at the Bank for Investment and Development of Vietnam, suggested.

Source: VNA

Related News

Control of major shareholders in banks

Control of major shareholders in banks

VCN - In compliance with the provisions of the Law on Credit Institutions 2024, banks have made public the list of information on shareholders owning 1% or more of shares. This is expected to block the “octopus tentacles” of cross-ownership.
Allocating credit room, motivation for banks to compete

Allocating credit room, motivation for banks to compete

VCN - The State Bank of Vietnam (SBV) has announced that it will allocate the credit growth limit (room) for banks that have achieved 80% of their target. This is an incentive for banks to increase their competitiveness.
Banks minimize costs, optimize profits

Banks minimize costs, optimize profits

VCN - In the first months of the year, banks' ability to optimize costs has improved significantly, especially when many banks have actively transformed digitally and cut costs in the context of a difficult economy.
Pressure on exchange rate plunges

Pressure on exchange rate plunges

VCN – The State Bank of Vietnam (SBV) has taken measures including intervening in the foreign exchange market and tightening liquidity to reduce pressure on the Vietnamese dong exchange rate.

Latest News

Urging credit flow into production and business sectors

Urging credit flow into production and business sectors

VCN - The allocation of cash flow among investment channels is influenced by many factors such as monetary policy, economic situation and investors' risk tolerance. But for developing the economy, cash flow must be directed into production and business, thereby reinvesting into the economy.
Tax authority handles 9.6 billion of e-invoices

Tax authority handles 9.6 billion of e-invoices

VCN - Regarding the results of implementing electronic invoices (e-invoices), the General Department of Taxation said that from the implementation to August 19, 2024, the number of e-invoices received and processed by the Tax authority was 9.6 billion.
Strictly handle price gouging and stabilize consumer sentiment after storms and floods

Strictly handle price gouging and stabilize consumer sentiment after storms and floods

VCN - Storm No. 3 (Typhoon Yagi) has caused serious consequences, leading to food shortages and localized price gouging. Pham Van Binh, Deputy Director of the Department of Price Management, Ministry of Finance, said that it is necessary to strictly handle acts of profiteering and violations of price laws.
General Department of Taxation implements tax exemption, extension of taxes and fees for people and businesses affected by storm No. 3

General Department of Taxation implements tax exemption, extension of taxes and fees for people and businesses affected by storm No. 3

VCN – The General Department of Taxation issued official Dispatch to 26 local Tax departments to instruct tax exemption, extension of taxes and fees for people and businesses after storms and floods.

More News

Insurance brings peace of mind to customers during Yagi typhoon

Insurance brings peace of mind to customers during Yagi typhoon

VCN - The Insurance Supervision Authority (Ministry of Finance) initially estimated that the total amount of insurance paid for human and property damage was about VND7,000 billion. However, with the severe damage caused by storm No. 3 (Yagi Typhoon) and the post-storm circulation, this number will certainly increase.
Banks lend significant amounts to green projects

Banks lend significant amounts to green projects

Many banks have recently poured thousands of billions of Vietnamese dong into green projects.
Curbing stock market manipulation

Curbing stock market manipulation

VCN - Amending and supplementing a number of articles of the Law on Securities is necessary to ensure that the securities market operates more transparently and effectively, to ensure the rights of investors, to prevent fraudulent behavior, and to create conditions for the development of the securities market.
Banks reduce interest rates, offer new loans for storm-affected customers

Banks reduce interest rates, offer new loans for storm-affected customers

Several private and State-owned banks have reduced interest rates and offered debt relief for customers affected by Typhoon Yagi.
New securities accounts in August reach record high in over two years

New securities accounts in August reach record high in over two years

August saw the highest number of new securities accounts opened in more than two years, dating back to May 2022.
Fiscal policy needs to return to normal

Fiscal policy needs to return to normal

VCN - Talking to Customs Magazine about the role and orientation of fiscal policy in the new period, Dr. Le Duy Binh, CEO of Economica Vietnam, affirmed that returning to normal fiscal policy is a message that is consistent with current reality.
Credit growth target is within reach to contribute to boosting economic growth: SBV

Credit growth target is within reach to contribute to boosting economic growth: SBV

Another important factor is to increase the capital absorption capacity of enterprises which will require a combination of macro policies to create favourable conditions for businesses, SBV’s Deputy Governor Đào Minh Tú said.
Strictly handle violations of invoices in a timely manner to avoid budget losses

Strictly handle violations of invoices in a timely manner to avoid budget losses

VCN - The General Department of Taxation has just issued a document directing local tax authorities nationwide to conduct close and timely review and supervision of businesses showing signs of risks in the illegal trade and use of invoices.
SBV gives the green light to increase credit

SBV gives the green light to increase credit

Commercial banks and other credit institutes whose credit growth reached 80% of the targets set by the central bank at the beginning of the year, will have their credit limit increased, stated the State Bank of Vietnam (SBV).
Read More

Your care

Latest Most read
Urging credit flow into production and business sectors

Urging credit flow into production and business sectors

VCN - With the fluctuations in the market, investment cash flows are shifting to diversify and choose the most suitable profit channel. As with stocks, since the beginning of the year, the number of newly opened securities accounts has continuously increa
Tax authority handles 9.6 billion of e-invoices

Tax authority handles 9.6 billion of e-invoices

General Department of Taxation said that from the implementation to August 19, 2024, the number of e-invoices received and processed by the Tax authority was 9.6 billion.
Strictly handle price gouging and stabilize consumer sentiment after storms and floods

Strictly handle price gouging and stabilize consumer sentiment after storms and floods

VCN - According to market surveys by the Department of Price Management), the prices of rice and meat are relatively stable compared to the time before the storm.
General Department of Taxation implements tax exemption, extension of taxes and fees for people and businesses affected by storm No. 3

General Department of Taxation implements tax exemption, extension of taxes and fees for people and businesses affected by storm No. 3

VCN - According to instruction, enterprises will be exempted and extended many taxes: Personal Income Tax, Corporate Income Tax, Special Consumption Tax, VAT deduction, Resource Tax, and non-agricultural land use tax.
Insurance brings peace of mind to customers during Yagi typhoon

Insurance brings peace of mind to customers during Yagi typhoon

The Insurance Supervision Authority (Ministry of Finance) initially estimated that the total amount of insurance paid for human and property damage was about VND7,000 billion.
Mobile Version