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Commercial banks hurry to expand credit
Unlike previously, when banks restricted loans to meet requirements on their capital adequacy ratio, they now have profuse capital and rush to find borrowers. Most are focusing on funding production and personal consumption, while restricting loans for real estate and securities investments.
VIB Bank has announced a program on lending capital to clients in some southern provinces (HCM City, Binh Duong, Dong Nai, Tay Ninh, Ba Ria-Vung Tau) who buy Toyota cars from Toyota Bien Hoa. These clients will be able to borrow sums of up to 80 percent of the value of their mortgaged assets.
Asia Commercial Bank (ACB), via ACB online, has launched a plan to provide loans with balances in fixed-term deposit accounts as mortgaged assets, and also loans under the mode of overdraft with balances in fixed-term deposit accounts as mortgaged assets. Such loans allow the banks to meet clients’ financial demand, while customers do not have to go directly to banks.
Bui Tan Tai, Deputy General Director of ACB, maintained that the negotiated interest rates applied on these programs are lower by 0.4 percent on average than normal interest rates.
As banks hurry off to expand credit, analysts have forecast that competition will be very stiff and will force banks to offer competitive lending interest rates.
Many banks believe it is now the right time for them to pump capital into the market after they saw low credit growth rate in the first nine months of 2010. The general director of a joint-stock bank in HCM City noted that, in the first nine months of the year, the bank’s outstanding loans rose by only 700 billion dong, due to difficulties in capital mobilization. Banks also had to reserve capital to meet requirements on the capital adequacy ratio stipulated in Circular 13.
Now, since some regulations of the circular have been amended, banks have more capital to lend and must consider how to expand credit.
Most are prioritizing loans to fund production and personal consumer deals. Why not the real estate sector, which consumes the most capital?
Nguyen Van Se, a senior executive of Vietinbank, observed that the real estate sector needs long-term capital, while banks only have short and medium term capital.
The Vietnam Banking Association has called on member banks to slash lending interest rates, especially in three priority sectors – agriculture and rural areas, export companies plus small and medium enterprises.
Many banks have promised to provide cheap capital to production companies. Do Minh Toan, General Director of ACB, many are collecting farm produce (Cassava, rice), and need more capital.
Meanwhile, a senior executive of Eximbank acknowledged that the bank is promoting company loans, especially to export companies. The interest rates will be lower by 1.5-2 percent than those for individual clients
Dam The Thai, Deputy General Director of HD Bank, explained that his bank will slightly ease lending interest rates in October to retain loyal clients and greet new ones. The bank will advance lending as capital demand increases towards the year’s end, when companies prepare for the Tet production season.
Capital poured into non-production sectors increased by 18.2 percent
According to the State Bank of Vietnam, by the end of September, outstanding loans given to non-production sectors had reached 385 trillion dong, an increase of 18.2 percent over the beginning of the year. Of this amount, loans to the real estate sector reached 218 trillion dong, while those to fund securities investments had been 15 trillion, and for consumer credit, 151 trillion dong. The outstanding loans to the agricultural sector had increased by 19 percent, to small and medium enterprises 20 percent, and to export companies 17 percent.
vietnamnet, Tuoi tre
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