Banks Seeking Solution to Boost Credit Growth

2:38:16 PM | 9/22/2014

Credit growth of the Vietnamese banking system was 5.82 percent in the first eight months of 2014. Credit flows have been channelled into some priority areas oriented by the Government. However, the credit growth was much lower than the full-year target of 12-14 percent. These facts were revealed by Mr Nguyen Tien Dong, Director of Credit Department under the State Bank of Vietnam (SBV), at a scientific seminar titled “Credit growth of Vietnam commercial banks: Current situation and solutions." This event was jointly organised by the Vietnam Banking Association (VNBA), Personnel Training and Development College under the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) in Hanoi.
 
According to statistics, as of the end of August, outstanding loans for agricultural and rural development rose 6.1 percent; outstanding loans for export climbed 4.37 percent; outstanding loans for technological application increased 12.73 percent; outstanding loans for supporting industries leaped 6.12 percent; outstanding loans for small and medium-sized enterprises inched up 2.57 percent; and outstanding loans for real estate soared 9.85 percent. However, these growth rates remained relatively low.
 
According to speakers at the seminar, objective reasons resulting in slow credit growth in the early months of 2014 are regular low demand at the early months of the year and weak capital digestion of the economy. Companies incurred high inventories, slow sales and slow business recovery, leading to rising corporate bankruptcies and weak confidence in future prospects. Besides, the difficulty in existing bad debt settlement also inhibited banks from providing fresh loans.
 
To bring the credit growth to the initial full-year target of 12-14 percent, speakers proposed many solutions to boost credit growth like supporting businesses to speed up business recovery, accelerating restructuring and equitisation of State-owned enterprises (SOEs), and settling nonperforming loans.
 
Besides, banks necessarily continue to implement aggressive solutions the State Bank of Vietnam (SBV) and credit institutions have carried out in the past time, and continue to improve credit mechanisms and policies to boost lending.

Hai Anh