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Vietnam allows banks higher lending targets to spur growth
Vietnam’s central bank has allowed lenders to raise their credit growth targets to up to 27 percent from a cap of 17 percent in a bid to boost lending and spur economic expansion, a senior central banker said on Friday.
Credit growth has been slow this year, as businesses are reluctant to take loans due to their high inventory and difficulties settling existing loans while banks tighten lending activities for fear of bad debt.
“The permission for several credit institutions to have a credit growth of 25-27 percent is appropriate, in line with the current extremely low credit expansion of the whole (banking) system,” said Nguyen Thi Hong, head of the State Bank of Vietnam’s monetary policy department.
The central bank stands ready to pump cash to help boost banks’ funds, Hong said in an online discussion held by the official Vietnam Economic Times newspaper.
Vietnam’s banking system is aiming for a credit growth this year of 8-10 percent, she said, revised from an initial projection of 15 percent, after an annual expansion of 14.4 percent in 2011.
Tien Phong Bank, a partly private lender, has received the central bank’s permission to expand lending by 27 percent this year, including investment in corporate bonds, an online report of the Vietnam Economic Times quoted the lender as saying.
It said the Military Bank may be allowed to raise its credit growth quota to 25 percent from an initial target of 17 percent.
The central bank had earlier set credit growth targets for individual domestic banks from between zero to 17 percent, trying to balance growth while keeping inflationary pressures in check.
Soaring credit growth in Vietnam recent years has stoked inflation, which rose to 23 percent year-on-year l ast A ugust b efore abating, ending the year at more than 18 percent. Hanoi aims to keep annual inflation this year at 9 percent.
Major lenders have said they will fail to fulfill the quotas, with Vietcombank estimating its credit growth at below 12 percent and Sacombank at 10 percent, state-run Saigon Giai Phong newspaper has reported.
VietinBank, Vietnam’s second-largest partly private lender by assets, will post annual credit growth of between 10-12 percent this year, following a slowdown in the first seven months, a senior executive said on Friday.
reuters
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