Vietcombank has almost reached its credit growth quota for 2018. (Source: Vietcombank)Hanoi (VNS/VNA)– More commercial banks expect their credit growth limits to be expanded thisyear after Techcombank became the first to get the nod to do so from the StateBank of Vietnam (SBV) recently.
Nguyen Le Quoc Anh, General Director of Techcombank, said that the bank hadrecently been allowed to raise its credit growth limit from 14 percent to 20percent this year. As a result, Techcombank will be permitted to lend anadditional 6-8 trillion VND (256.41-341.88 million USD) in the last months of2018.
The move is good news for banks as the last quarter of the year is often thepeak lending season while many banks have already hit their credit growthquotas for 2018. At the beginning of the year, the SBV set a credit growthlimit for each commercial bank - ranging from 12-16 percent this year -depending on the bank’s health.
According to analysts, the expansion of the limit was due to creditgrowth in the entire banking sector reaching just 9.89 percent as of earlyOctober, much lower than the 11.73 percent rate recorded a year earlier.
The low rate threatened the Government’s full-year credit growth target of 17percent, especially when many major banks had almost used up their creditquotas.
Ten major banks such as Vietcombank, HDBank, MB, Vietinbank, BIDV, VIB andVPBank had nearly reached their credit growth limits in the first nine monthsof the year.
However, it is forecast that only several banks would be allowed to extendtheir 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 itsdebts with the Vietnam Assets Management Company (VAMC), and had a capitaladequacy ratio (CAR) of 14.33 percent, much higher than the standardised ratio.
The SBV’s decision to expand credit growth limits for some banks in 2018 hadalso raised concerns about rising inflation.
Nguyen Tien Thoa, Chairman of the Vietnam Appraisal Association, said that theloosening of credit growth would certainly affect inflation, however, the levelof the impact would depend on the total amount of additional credit and thetime of disbursement.
Thoa said the SBV should be cautious as the country’s consumer price index hadnearly reached the 4 percent target set for 2018 while prices of goods andservices had shown no signs of falling.
In Directive No. 04/CT-NHNN issued in August, the SBV instructed creditinstitutions to strictly control the pace and quality of credit of the wholebanking system. The central bank indicated it would not consider adjustingcredit growth limits up for commercial banks (except in special cases, such asthose involved in restructuring weak credit institutions scheme in 2018).
Relating to the policy on allocating credit quota to each bank, Tran Du Lich, amember of the National Monetary Policy Advisory Council, said that in the shortrun, the SBV could not allow commercial banks to freely decide on their owncredit growth and should apply administrative intervention to ensure thecountry’s macroeconomic stability.
However, in the long term, the SBV should abandon this credit policy andcontrol credit based on banks’ CARs to match international practices whilestill controlling banks’ capital flows, Can Van Luc, chief economist at theBank for Investment and Development of Vietnam, suggested.-VNS/VNA
VNA
