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Banks complain over limited credit growth capacity
A number of banks have asked the State Bank of Viet Nam (SBV) to increase their credit growth limits, claiming the quotas are insufficient for the whole of 2013.
Earlier this year, the SBV assigned specific credit growth limits to commercial banks based on their economic health.
Banks, which are ranked in the top group based on , credit quality, liquidity and corporate governance, are permitted to expand their total credit by a maximum of 12 per cent this year, equal to the credit growth target set for the whole banking sector.
The lending growth cap for banks ranked in the second group is 10 per cent, while particularly weak banks will not be allowed to increase loans this year.
Most banks seeking to raise the quotas are those planning to expand their retail banking activities.
Sacombank was among the first lenders to gain approval for increasing its credit growth limit. Online news site Vnexpress.net quoted a source close to the bank as saying the SBV had allowed Sacombank to increase this year's lending to 20 per cent, up from the 12 per cent previously granted.
Sacombank CEO Phan Huy Khang said the firm's credit growth had been encouraging, reaching 8 per cent in the first five months of the year.
The bank's credit growth room for the remaining months of the year was restricted, so it needed a bigger quotas to be able to increase lending further, Khang said.
Vietnam International Bank also revealed its intention to ask for the central bank's approval to adjust its credit growth limit. is expected to exhaust its lending growth quota of 9 per cent by September.
The general director of another bank in Ha Noi, who declined to be named, said his bank also planned to ask for a higher credit growth quota.
Credit growth often surged sharply in the third and fourth quarters, he said, adding an early adjustment was therefore necessary for his bank to seize the opportunity to boost lending at the peak time.
In response, SBV governor Nguyen Van Binh said the initial limits allocated to banks were not fixed and could be reviewed after the first half of the year.
In cases where banks could achieve higher credit growth, they should report to the central bank for adjustment immediately, Binh stressed.
Experts also widely supported the central bank's move to increase credit growth quotas for qualified banks.
Senior financial expert Nguyen Tri Hieu said that to minimise risk, only banks with ‘real' credit growth and those that align funds into the right areas should be allowed to raise the limits.
Governor Binh expected the banking industry would meet the credit growth target of 12 per cent this year. By the end of May, lending rose nearly 3 per cent against 0.56 per cent over the same period last year.
"We gained credit growth of nearly 9 per cent in the second half of last year. If we can do that in H2 this year, lending for the whole year will rise 12 per cent as targeted," Binh said.
He added that credit growth even could reach 15 per cent if economic conditions became better.
vietnamnews
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