Sign up | Log in



Home >> Daily News >> Vietnam News  >> Capital Markets >>  Vietnam banks fear to expand credit

NEWS UPDATES 9 June 2010

Vietnam banks fear to expand credit

Related Stories

June 7, 2010
ATM network push in Vietnam

May 25-26, 2010
Vietnam: Govt wants deposit rate cuts

March 17, 2010
Vietnam: Australian bank to withdraw stake in Saigon bank

May 16, 2010
Philippines: Aquino to be named president one week ahead of schedule

May 15, 2010
Philippines: Aquino seeks control over house, reaches out to rival

May 14, 2010
Myanmar polls 'a farce', says Philipine minister

May 13, 2010
Philippines: Marcoses seen as coming back to political arena

Banks fear that they may fail to complete their plan to expand credit in 2010

It’s difficult to mobilize capital

The General Director of a joint stock bank complained that his bank has to ease the interest rate just several days after raising its deposit interest rates in an attempt to mobilize more capital. In the first five months of the year, the capital volume mobilized by the bank has decreased by 2 trillion dong. “Both individual and institutional depositors have left us for other banks,” he complained

Other bankers have also noted that it is very difficult to mobilize capital these days. Meanwhile, they said that they cannot seek much capital on the interbank market, because the State Bank has stipulated that the volume of capital mobilized in the interbank market must not be higher than 20 percent of the total capital mobilized from institutions and individuals.

Unlike big banks, the above said bank cannot borrow capital from the State Bank of Vietnam because it does not have bonds which can serve as the mortgage for the loans. The General Director said that his bank might not be able to fulfill its plan of obtaining the credit growth rate of 25 percent this year as hoped.

Other banks are also facing the same situation. According to Sacombank, by the end of May, the bank had mobilized only 86,557 billion dong, which marked a modest increase of 0.3 percent over the end of 2009.

Nguyen Phuoc Thanh, General Director of Vietcombank also said that the capital volume mobilized by his bank in the first five months of the year increased by three percent only in comparison with late 2009.

It’s difficult to lend, too

Thanh of Vietcombank said that the credit growth rate of his bank in the first five months of the year was seven percent only, and admitted that it is very difficult to obtain the targeted 20 percent credit growth rate this year.

Thanh said that at this moment, the State Bank of Vietnam does not encourage banks to fund real estate projects and push up consumer loans. Meanwhile, it is difficult to find businesses to lend, because the demand is still low from the production sector, as the world economy still recovers from the economic crisis.

“People say that businesses cannot borrow money from banks because of the overly high lending interest rates, but if the lending interest rates are low and businesses cannot sell their products, they will also not dare to borrow money,” Thanh said.

Sharing the same view as Thanh, the Director of a branch of a state owned bank also said that he fears that he cannot fulfill the credit growth plan this year. He said that borrowers can be found in the real estate market, thanks to the market has warming up recently. However, banks are not encouraged to fund real estate projects.

Sacombank has reportedly had outstanding loans reaching 60,077 billion dong by the end of May, increasing just 8.3 percent over late 2009. Meanwhile, the bank’s shareholders want to see a credit growth rate of 45 percent this year.

While banks are complaining, Tran Hoang Ngan, Member of the National Advisory Council for the Monetary Policy, said that it is necessary to see a slowdown in outstanding loans growth, because the credit growth rate was 38 percent in last year, a very high growth rate. A 20-25 percent credit growth rate in 2010 would be reasonable, according to Ngan.


Comment on this Article. Send them to
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below 





1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

Our Products | Work with us | Terms of Use | Site Map | Privacy Policy | Refund Policy | Shipping/Delivery Policy | DISCLAIMER |

Version 5.0
Copyright © 2007-2015 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand