The Government’s Resolution 01/NQ-CP on key solutions to realise socio-economic development plans and budgetary estimations sets a credit growth target of 15 - 17 percent for the whole banking sector in 2012. Since the start of the year, the State Bank of Vietnam (SBV) has allocated credit growth quotas for four rated groups of commercial banks (the credit growth cap for banks assigned Group 1 is fixed at 17 percent, Group 2 at 15 percent, Group 3 at 8 percent and Group 4 at zero percent). However, after the requests from commercial lenders for widened credit, the SBV loosened credit growth but the growth is unlikely to exceed 15 percent.
According to a report released by the central bank, credits outstanding of the whole banking sector increased 1.51 percent in the year to end-June, of which 69 credit institutions experienced negative credit growth and 57 units posted positive growth.
At the mid-year conference to review the banking operations in the first half of 2012, SBV Governor Nguyen Van Binh required commercial banks to review their credit growth in the first six months and make a plan for credit extension in the second half of the year to be sent to the SBV for consideration.
According to the latest report from the central bank, up to now, 62 credit institutions have submitted their reports to the SBV, with 23 having suggested figures in excess of the targets, 29 developing their credit growth in line with the assigned criteria, and 10 working out their own criteria lower than the assigned levels.
Based on proposals, operational conditions, financial health, and credit extension ability of credit institutions, the central bank allowed 10 credit institutions with healthy financial positions to perform the credit growth rate of 50 percent of the criteria assigned by the SBV at the beginning of the year.
TienPhong Bank is the first bank to be granted credit growth boost to 27 percent this year. In addition, OceanBank and Military Bank (MB) were allowed to raise their credit growth limits to 27 percent and 25 percent, respectively.
The rest will have to comply with the assigned criteria. In the second half of the year, if they are able to exceed the assigned criteria, it should be reported to the SBV for a decision, depending on the monetary movements and credit growth of the whole banking sector.
Hence, credit growth rate varies among credit institutions. Some are given higher credit growth limits than initial quotas, while others are subjected to lower limits and some keep the initial quotas. In general, banks must comply with their adjusted criteria, and the credit growth of the whole banking sector in 2012 will not exceed the rate of 15 percent in accordance with the set annual target without causing any inflationary pressures.
However, the central bank also admitted that it is difficult for credit institutions to strictly comply with their adjusted criteria, depending on such factors as easing inventory, expanding the consumer market, unlocking cash flows, supporting eligible corporate borrowers, etc. According to the SBV, in the best scenario, credit growth of the whole banking sector in 2012 will not exceed the rate of 8 – 10 percent, resulting in no inflationary pressure at all from the credit side.
Quynh Anh
Vietnamese
