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Spectre of bad debts prompts banks to curb lending
Although the year will end in December, banks in HCM City are not exactly scrambling to give away loans to achieve their credit growth targets since they are wary of bad-debt risks.
The banking sector's growth target has been lowered to a modest 8-10 per cent this year, but many banks seem unlikely to achieve it.
Many of them may have announced preferential credit packages but their sights are set firmly on risk management.
The City Housing Development Bank (HDBank), for instance, is offering personal loans at just 8.6 per cent interest, and the Viet Nam Joint Stock Commercial Bank for Industry and Trade (Vietcombank) is offering credit to companies involved in exports at 9 per cent.
Many others have similar schemes. But actual lending has been sluggish.
According to latest figures, deposits are up by nearly 11 per cent from last year, but loans outstanding have risen by a measly 2.5 per cent.
Sai Gon Thuong Tin Joint Stock Commercial Bank (Sacombank) was allowed by the central bank to grow credit at 17 per cent this year, but the increase has only been 8 per cent so far.
Sacombank does have several credit schemes on easy terms and low interest rates.
Its lowest rates now are between 11 and 12 per cent, but loans are only given to companies against collateral, general director Phan Huy Khang told Lao Dong newspaper.
"The bank offers unsecured loans only to individual customers who want to borrow for a short term, and exercises strict control over these loans to reduce risk," he added.
The Import and Export Joint Stock Commercial Bank (Exim-bank) has seen outstanding credit actually decline by 2.3 per cent.
A bank spokesperson said despite this the bank would not lend without careful consideration.
Like Sacombank, it too has a credit growth quota of 17 per cent.
"Eximbank's main task now is to focus on restructuring loans to gradually reduce bad debts," he added.
Tran Phuong Binh, general director of the Dong A Joint Stock Commercial Bank, said the bank is not focused on achieving the credit growth target, but rather on sustainable development.
"The bank's top priority is also to restructure loans to reduce bad debts," he said.
Independent analysts said commercial banks have freed up credit compared with a few months ago, and as evidence pointed to the fact that they have earmarked large sums to lend to the property sector, which until recently was a no-go area for many.
But they are more focused than before on credit risk, they said.
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