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Banks may trade credit growth quotas
Experts have predicted that commercial banks may mutually transfer credit growth quotas to balance their practical lending situation after the State Bank of Viet Nam allocated different rates of credit growth for banks this year.
Under a State Bank directive issued earlier this month, four credit institutions and bank groups were designated growth rates from zero to 17 per cent based on their health and performance last year.
Specifically, Group A was allocated the highest credit growth of 17 per cent for the year, Group B with 15 per cent, Group C with 8 per cent and Group D with zero per cent.
Sai Gon Tiep thi (Sai Gon Marketing) newspaper quoted DongA Bank's general director Tran Phuong Binh as saying he expected the State Bank to have a flexible policy in managing the allocated quotas.
"While some banks are not allowed to expand credit growth, some may not use up their quotas and may make deals with other banks [to transfer the unused portions], on condition that they can still assure the general credit growth target of the nation and don't affect the general quota of the entire [banking] sector," Binh said.
The newspaper also quoted an anonymous expert as saying the transfer of outstanding loans was familiar in the banking area, in that a bank that wanted to increased outstanding loans could buy debt documents from other banks.
Le Tham Duong from the HCM City Banking University warned that such credit quota transfers could affect the State Bank's supervision and assessment of bank operations as well as efforts to deal with the hot credit growth situation that created liquidity concerns for banks last year.
He noted that the goal of the State Bank when assigning the zero-per-cent credit growth to some commercial banks was to concentrate on restructuring these banks. If the quotas were shared, the State Bank's direction might be off target, he said.
Banks announced as being in Group A include Sacombank, Asia Commercial Bank, Eximbank, Military Bank, Maritime Bank, Mekong Housing Development Bank, VP-Bank, VIBank and Sea-Bank.
DongA Bank was listed in Group B, in addition to Nam A Bank and DaiABank.
No banks were reported to be in the C and D groups.
Commercial banks, meanwhile, were submitting reports detailing their lending plans for this year to the State Bank as required.
Binh said DongA Bank's outstanding loans were expected to reach about VND50 trillion (US$2.38 billion) this year, up 13.6 per cent over last year. The bank would give credit priority to production and export activities with a focus on agriculture, handicraft and garment sectors.
The export sector, representing a small part of the bank's total outstanding loans, will enjoy preferential annual interest rates of 16-16.5 per cent on dong loans and 4-4.5 per cent on dollar loans, against deposit rates of 14 and 2 per cent, respectively.
"We will have to enhance checks on the quality of loans and work out ways to recollect debts from customers who show no signs of development or exhibit a tendency to increase bad debts," Binh said, adding that existing customers might not benefit from credit increases.
Earlier, Maritime Bank developed a lending plan to control credit activities to ensure its growth rate would not exceed 17 per cent at any time this year.
VPBank said that although it was classified in Group A, its lending rate for non-production sectors had climbed to 16 per cent so the bank did not plan to offer many personal loans.
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