Banks skeptical of credit growth

Though commercial banks have promised to ease interest rates to boost lending, they are not optimistic about credit growth in the last six months of 2010.

VnnNews – Though commercial banks have promised to ease interest rates to boost lending, they are not optimistic about credit growth in the last six months of 2010.

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Nguyen Duc Vinh, General Director of Techcombank, confirmed that, in the first five months of 2010, the bank’s credit growth rate was not high, standing at six percent in comparison with the end of 2009. The figures are even lower than the average growth rate of the whole banking system, 7.46 percent. Vinh added that the credit growth rate in June will also be unsatisfactory.

The general director explained that although the bank has eased lending interest rates to 13-15 percent per annum, lower than the previous level of 16 percent, lending remains poor.

“The lending interest rate is not the main problem deciding the credit growth rate. The problem lies in whether or not businesses are capable of accessing bank loans,” Vinh maintained.

He went on to say that the world economy has not fully recovered, therefore, banks need to keep cautious when lending to small and medium enterprises.

Nguyen Thi Ngoc Van, Deputy General Director of Dong A Bank, also admitted that their credit growth rate in the first five months was “not really high.”

A senior executive of the Bank for Foreign Trade of Vietnam (Vietcombank) also revealed that the lending interest rate has been eased to 13 percent, but not many businesses want bank loans. The executive declined to predict credit growth for the last six months of 2010, but he hoped credit would be expanded, because the last months are always a time when businesses need capital most.   

An Binh Bank is an exception, with a satisfactory credit growth rate of 12 percent in the first five months of the year in comparison with late 2009. The bank expects to see the figure rise to 15 percent by the end of June. Pham Quoc Thanh, Deputy General Director of An Binh Bank, observed that lending in the first months of 2010 concentrated on the production sector, while consumer loans increased very slowly because of high interest rates.

If the current credit growth rate can be maintained, An Binh Bank hopes that it will be able to reach a 40 percent credit growth rate this year.

Most banks reported that they saw deposits made by economic institutions decrease considerably in the first months. This demonstrates that businesses have gathered all their sources for production, while they limit bank loans.

While commercial banks are pessimistic about lending in recent days, the State Bank of Vietnam has released more optimistic figures about credit growth for the whole banking system. The central bank has estimated that the credit growth rate for June 2010 will increase by 3.06 percent over May, the highest growth rate so far this year. It is expected that, by the end of June 2010, the credit growth rate will be 10.52 percent compared to the end of 2009.

Source: Thoi bao Kinh te Saigon

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