Banks increase lending

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VietNam News English - 27 month(s) ago 4 readings 1 duplicate news

Banks increase lending

Commercial banks will cautiously attempt to increase lending in the second half of the year while trying to avoid incurring further bad debts, industry leaders have said.

Customers make transactions at VPBank‘s HCM City branch. Despite a slowdown in credit growth in the opening months of the year, most banks continued to post profits. — VNA/VNS Tran Viet
HA NOI —

Despite a slowdown in credit growth in the opening months of the year, most major banks continued to post comfortable profits for the period.

In a recent response to a National Assembly deputy's query, State Bank of Viet Nam Governor Nguyen Van Binh said the nation's lending had been showing signs of rallying since March.

But banking industry insiders continue to see difficulties facing credit operations, the major source of profits for banks.

National Advisory Committee for Financial and Monetary Policies member Tran Hoang Ngan attributed declines in lending this year to moves by many banks to accelerate lending figures at the end of last year to meet credit growth quotas. This caused the bad debt levels of many banks to gradually increase and hindered them from extending new loans, Ngan said.

DongA Bank general director Tran Phuong Binh said banks were expecting the credit picture to improve in the second half of the year so that they would be able to meet ambitious profit targets for this year, which include VND6.5 trillion (US$312.5 million) in profits for Vietcombank, VND5.5 trillion ($264.42 million) for Asia Commercial Bank, and VND4.6 trillion ($221.15 million) for Eximbank.

Profits from lending represented about 70 per cent of DongA's total pre-tax profits, Binh noted, but he also said that banks would not try to boost credit growth at any cost in the face of the current bad debt situation.

Eximbank chairman Pham Trung Cang said his bank was selecting borrowers very carefully to avoid the risk of increased bad debt levels – even though the bank had substantial disposable capital on hand.

"We have slashed interest rates to levels even lower than the ceiling rates, but it's not easy to lend," Cang said. "It's very hard to find good clients to whom to lend money at the present time."

Eximbank reported on its website that it had reached a profit of about VND1.47 trillion ($70.77 million) in the first quarter of this year, up 48 per cent over the same period last year. Lending grew by 2.4 per cent in May after slumping by 5 per cent in the first four months of the year.

Vietcombank posted a pre-tax profit of VND1.35 trillion ($64.7 million) in the first quarter. Bad debts rose to 2.87 per cent by the end of March, however, requiring the bank to establish a provisionary fund of VND950 billion ($45.7 million) to cover credit risks, its financial report showed.

Among other leading banks, HDBank posted a profit of VND140 billion ($6.7 million) in the first quarter, despite a 5-per-cent decline in lending during the period. According to the publication Dau tu Chung khoan (Securities Investment), Asia Commercial Bank posted a VND1.1 trillion ($52.38 million) profit for the quarter, while DongA Bank saw a profit of VND500 billion ($23.8 million) in the first four months of the year and Sacombank tolled a pre-tax profit of VND1.6 trillion ($46 million) in the first five months. Many banking industry leaders said the high profit figures were still low for major banks with trillions of dong in equity. — VNS

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