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Banks remain resilient in midst of crisis
Viet Nam's resilient banking system appears to be weathering the global financial storm, with total assets rising by 0.79 per cent between January and July, according to the State Bank of Viet Nam.
Assets now stand at nearly VND4,999 trillion (US$238 billion), making a jump of nearly 2 per cent on the previous month.
State commercial banks were the star performers during this period, increasing their assets by 3.72 per cent since late 2011 to take their value to VND2,043 trillion ($97.28 billion).
Meanwhile, the total assets of commercial joint stock banks, joint venture banks and foreign banks posted negative growth. Total assets of commercial joint stock banks by the end of July stood at VND2,226 trillion ($106 billion), down 1.6 per cent from the end of 2011 but up by 0.7 per cent on the previous month. The group of joint venture banks and foreign banks tumbled to a value of VND533.38 trillion ($25.39 billion), down 2.45 per cent over the above mentioned period.
The charter capital of the whole banking system also made gains, reaching VND384,918 trillion by the end of July, a gain of 9.19 per cent over the seven months. The bulk of these gains were fuelled by the charter capital of State commercial banks, which surged 27.87 per cent, while the group of commercial joint stock banks rose by a more modest 4.78 per cent.
Return on assets (ROA) of the entire banking system by the end of July remained unchanged at 0.39 per cent from the end of June while return on equity (ROE) rose to 4.14 per cent. However, the capital adequacy ratio (CAR) dropped to plus 14.03 per cent for the year so far, falling from 14.19 per cent in the end of June.
The central bank also reported that credit growth for the whole banking system had risen by 1.82 per cent for the year up to September 7.
Some large banks saw relatively high credit growth in the period.
For example, the Bank for Investment and Development of Viet Nam (BIDV) saw credit growth of 13.5 per cent for January-August, while the figure for the Military Commercial Joint Stock Bank (MB Bank) was 10 per cent. However, it should be noted that excluding corporate bonds, assets for total outstanding loans fell at these lenders.
Other big banks saw slower credit growth while some even reported a decline. Viet Nam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)'s credit grew by only 2 per cent while Viet Nam Export Import Commercial Joint Stock Bank (Eximbank) saw credit contract in the first 8 months of the year.
With the low credit growth to date, National Advisory Council for Financial and Monetary Policy member Tran Du Lich said it would be difficult for the banking industry to meet the Government's credit growth target of 8-10 per cent for 2012.
Industry insiders advised that credit growth slowdown was often followed by a rise in capital demands at the end of the year.
General director of Vietcombank Nguyen Phuoc Thanh, whose bank saw credit growth of 7 per cent, attributed the credit slowdown to the decreasing number of business borrowers.
Thanh said that struggling firms were hesitant to borrow as they faced difficulty keeping up with interest rate repayments. Large-d firms, meanwhile, had to cut back on loans as they were reluctant to expand as long as consumption demands remained low.
Chairman of the Orient Commercial Bank (OCB) Trinh Van Tuan also said that after a rise in July and August, credit demands at his bank had slowed.
Tuan said that the OCB's credit growth in the first eight months was nearly 10 per cent and expressed concern that the bank was unlikely to use all this year's 15 per cent credit growth quota allocated by the central bank
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