Credit quotas make no more significance to banks

The State Bank of Vietnam has decided to allocate credit quotas based on the operation scale and the capability of commercial banks.

Analysts have noted that some banks have been granted the credit growth rate limits lower than their capability. VietinBank, for example, planned to have the outstanding loans growth rate of 15-20 percent in 2013, while the State Bank has allowed the 13 percent growth rate only. Similarly, MB planned 17 percent and granted the 12 percent quota, Lien Viet Post Bank wanted 30 percent, but can 12 percent.

However, the majority of banks don’t care much about the credit quotas, saying that they may not use up the quotas granted by the central bank.

The director of a bank in the south said his bank can have the credit growing by 9 percent this year. Meanwhile, merely no growth has been made so far this year. He said that it’s very difficult to push up lending at this moment, when businesses don’t intend to expand their production.

Meanwhile, banks now have to be more cautious with their disbursement. The stricter regulations on non-performing loan classification with the required higher provisioning against risks have forced banks to strengthen the credit quality control. This means that banks would not hurry to lend at any cost to hit the ceiling credit growth rate.

A senior executive of a medium scaled joint stock bank said his bank’s credit growth rate was 2 percent in the first months of the year. Therefore, the 12 percent target may be unattainable.

A banker has commented that the central bank is seemingly too cautious when granting credit quotas. There’s no need to worry that banks would lend too much, because they cannot find borrowers.

Commercial banks all have reported the very low credit growth rate for the first quarter of 2013. However, this did not worry banks, because they believe that pushing up the disbursement at this moment means incurring higher risks.

As for commercial banks now, controlling the credit quality is a more important task than increasing credit.

Governor of the State Bank -- Nguyen Van Binh, also said though the credit grew slowly in the first quarter of 2013, but the credit quality was better than that of the same period of the last year.

In fact, banks have been trying every possible method to increase the disbursement. However, businesses still keep indifferent to the preferential credit packages launched by banks.

The credit officer revealed that his bank now offers to provide short term loans to production enterprises at 9 percent per annum for the first 3 months and 12 percent for the next months. As for long term loans, the interest rates would be floating from the second year. Especially, the bank only requires the low interest rate of approximately 10 percent per annum, while clients can borrow up for 10-15 percent, if borrowers have collaterals for the loans.

However, despite the very attractive offers, there have been very few feedbacks about the credit package.

Most of the banks have reported their strong liquidity, except a few weak small banks.