Banks get nod to muscle up credit growth

The State Bank is approving more banks to raise credit growth, but the banking system’s lending is unlikely to exceed the targeted 8-10 per cent growth for 2012.

OceanBank’s general director Nguyen Minh Thu said the State Bank had just allowed OceanBank to expand its credit growth to 27 per cent this year against the end of 2011, higher than the initial 15 per cent limit.
In the year to July 31, OceanBank’s credit growth was 16.7 per cent, or VND30,169 billion ($1.4 billion).
The lender’s capital adequacy ratio (CAR) and loan to deposit ratio (LDR) are 12 per cent and 66.7 per cent, respectively. Only 20.58 per cent of OceanBank’s short-term capital is used to finance medium and long-term loans, which is within the State Bank’s limit of 30 per cent.
Similarly, VPBank and HDBank, whose original credit growth was 17 and 10 per cent respectively, last week got the State Bank’s nod to have credit growth of 30 per cent this year to VND51,000 billion ($2.44 billion) and VND23,115 billion ($1.1 billion), respectively.
Previously, Military Bank and TienPhong Bank received the okay for credit expansion of up to 25 and 27 per cent, respectively against the end of 2011.
Meanwhile, foreign banks have also joined the race for higher credit growth. A Sumitomo Mitsui Banking Corporation representative told VIR that the Japanese bank had already obtained State Bank approval for a new credit growth limit which is higher than its initial 17 per cent.
ANZ also had permission to enhance credit growth to higher than 17 per cent.
According to State Bank figures, there are 23 credit institutions pushing to expand credit growth, while 29 planned to use up their granted credit growth and 10 forecast credit growth lower than granted this year. The State Bank already approved 10 banks to expand their credit growth.
However, banks that have their credit growth limits this year expanded will make up only a small part of the total banking system’s credit expansion. Giant state-owned banks such as Agribank, BIDV, Vietcombank and Vietinbank, which held an aggregate 50 per cent credit market share in 2011, are still having difficulties in promoting lending activities.
Vietcombank and BIDV’s credit growth for the first half of this year was 2.96 and 10.75 per cent, respectively. In the year to May 2012, Agribank’s figure was 0.8 per cent.
Vietinbank’s general director Nguyen Van Thang said the bank’s credit growth in the first seven months of this year was minus 2 per cent. The expected credit growth of Vietinbank this year is 10-12 per cent, lower than the permitted 17 per cent.
Tran Du Lich, a member of the National Monetary Policy Advisory Council, said the banking system’s targeted credit growth of 8-10 per cent this year would be hard to be achieved given enterprises’ high inventories and soft demand.
The State Bank late last month said on its website that although banks were allowed to lend out more, it would be very difficult for them to reach the adjusted credit growth. “Total banking system credit growth could not exceed the targeted 8-10 per cent and could not create pressure on inflation this year,” the central bank stated.

 By An Nhien