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Wednesday, July 24, 2024

Certain banks to get extra credit growth quotas

The Saigon Times

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HCMC – Those commercial banks that have reported credit growth of 80% or higher in the year to date will be automatically entitled to extra credit growth quotas based on their 2022 rankings, the State Bank of Vietnam (SBV) has announced.

The move comes as commercial banks have found it increasingly tough to lend as the demand for loans in the economy has remained woefully low due to persistent economic woes at home and abroad.

Data of the SBV, the central bank, showed that credit in the banking system had grown a mere 8.21% in the year to November 22 while the SBV’s full-year target is 14-15%, which is subject to change.

On November 29, the central bank wrote to commercial banks announcing that some of them with credit growth of 80% or above achieved so far this year now have extra credit growth quotas for this year based on their rankings of last year.

By July this year, the central bank had already allocated quotas for credit expansion for banks nationwide, with combined credit growth of 14.5%.

State-run banks have struggled to gain high credit growth while privately-held banks have performed well in lending operations.

State-run Vietcombank reported a credit expansion rate of 4% by the end of the third quarter, and BIDV and VietinBank posted credit growth of 9% each.

In contrast, privately-owned banks such as VPBank, MBBank, Techcombank and HDBank have reported achieved double-digit credit growth rates, with VPBank taking the lead at 26%.

Concerned about the lower-than-expected credit growth this year, Prime Minister Pham Minh Chinh recently said the central bank would be held accountable for banking system safety and hindrances to provision of credit for the econony.

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