Many commercial banks in Vietnam have worried that their lending in the rest of this year will not accelerate as expected due to restrictive regulations, the limited current capital for lending as well as difficulties in looking for good borrowers.
Pham Trung Cang, vice chairman of Asia Commercial Bank (ACB), said that outstanding loans at the bank had not increased much in recent months.
“We really want to lend more but it is not easy to find good corporate clients who have good credit history and ability to pay debts. Meanwhile, we cannot lend bad clients,” he said.
Total outstanding loans of ACB at the end of August grew 30% from end-2009, compared to the full-year target of 54%. The listed bank will not fulfil its lending target since it has only four months left.
Cang, who also serves as chairman of the Vietnam Plastics Association, also noted that many clients did not want to borrow now, not only because of high lending rates but also because they could not find outlets for their products as the global economy was not much better now.
“If enterprises cannot sell products, they don’t want to borrow money even at 10% per year,” he added.
For big banks like ACB, the credit growth depends much on finding good borrowers, while small and medium banks have limited funds to make loans.
Orient Commercial Bank (OCB) is launching programs to lure depositors in an effort to have more capital for lending, but the prospect is not bright. The bank has even offer an interest rate as high as 5.8% per year for call deposits, in addition to a promotion program with prizes of VND7.5 billion to lure depositors.
Trinh Van Tuan, CEO of the bank, said that his bank found it hard to spur lending as the lender’s loan-to-deposit ratio has hit 90%, higher than the 80% ceiling provided for in a circular that will take effect on October 1. That means the bank cannot increase credits if its mobilization does not increase.
The Circular No. 13 on safety of banking operation requires banks to keep the loan-to-deposit ratio at 80%, and the mobilized funds must exclude call deposits. The circular has prompted numerous outcries, and bankers are waiting to see whether the central bank will reschedule the circular’s effective date or not.
While credit growth in Vietnam dong is slowing down, outstanding loans in the U.S. dollar has been growing strongly, draining out the greenback pool at banks due to slow mobilization as well. Therefore, the possibility is slim for banks to increase dollar loans in the rest of the year.
The HCM City Branch of the State Bank of Vietnam said total deposits of local banks rose 13.3% in the first eight months while the credit growth was 11.3%. Of which, credit growth in dong was 5.8% while that in dollars was up to 28.5% from end-2009. (Labor)
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