By Hong Phuc - The Saigon Times Daily
HCMC – As local banks are still busy dealing with high mobilization costs and rising bad debts ratios, they have failed to cut lending rates in line with the proposed level by the central bank and to disburse capital to borrowers for better credit growth.
As observed by the Daily, in spite of the ceiling deposit rate slashed to 9% per annum, Agribank, BIDV, MB and Vietcombank have still offered different levels of lending rates for their preferential lending programs, ranging from 11% to 13% annually.
Meanwhile, these banks have disbursed capital to companies in dribs and drabs, with priority given to only familiar customers with loans due to expire. That fact shows that there are no new credit contracts to be clinched between new firms and local banks so far.
According to an executive of a private steel and stainless steel processor and exporter, most financial packages targeting enterprises at local lenders are for public relationship purposes only. “We want to stop the present credit contract to enjoy lower lending rates but the bank told us to wait for another one or two months. It is because it has still mobilized deposits at high costs,” the executive said.
Also, stagnant credit activities are ascribed to surging bad debts ratios at local banks, leading to their cautiousness in lending activities as a result.
The loss-making Vinashin still owes a hefty loan of up to VND4 trillion to a State-owned bank which is awaiting the support of the Government to tackle the debt within three to five years. Another debt of Vinashin was also scheduled for restructuring in three to five years’ time from last year.
Moreover, the ratio of the second-group debts of the bank has stayed at over 10% for many years compared to the level of under 10% as repeatedly recommended by its credit rating agency.
A senior executive of the bank told the Daily his bank is focusing on credit quality rather than credit growth. “Our main office sends to branches lists of industries and companies exposed to risks and declining credit quality every month. And the tasks of the latter are to minimize new debts and apply strict supervision over existing loans,” the banker said.
Central bank deputy governor Le Minh Hung recently told the media that the central bank will have to continue to cut interest rates if credit activities between firms and lenders show no signs of improvement with the current deposit rate cap of 9% annually. The deputy governor also noted that one of the main missions of the Government for the rest of the year is to handle bad debts in the banking system.