Credit growth harnessed at 15%-17%: governor
By Tu Giang - The Saigon Times Daily
HANOI – The credit growth in 2012 will be around 15%-17%, a little higher than the actual figure this year but far lower than the average rate in the past few years, the central bank’s Governor Nguyen Van Binh stressed on Saturday.
Speaking at the banking conference to set out targets for next year, Binh said the credit growth for 2012 was planned in a way to ensure macroeconomic stability and to fight inflation.
This year’s credit growth is estimated at 12%-12.5%, and the level for next year should be 15%-17%, he said. The governor said this would be the lower target in as many years, since the average credit growth rate was 29.4% in the past ten years and 33.5% in the past five years.
The governor urged banks to continue austerity measures to help achieve stability.
Binh said the credit growth target would not be the same for all banks, but those institutions with better performance will be given wider room for credit expansion.
Discretion is needed for all banks in managing their credit growths, according to the governor. He asked banks to make specific credit schemes for each quarter and for the whole year according to the specific targets assigned to each bank.
Prime Minister Nguyen Tan Dung, addressing the banking conference, also reiterated the needs for macro stability and fighting inflation, and in order to do so, he ordered the central bank to curb credit growth at 15% alongside measures to ensure capital for enterprises.
The Prime Minister also suggested the State Bank of Vietnam to seek ways for lowering the interest rate to make life easier for corporate borrowers.
“There is no reason not to lower the interest rate when the inflation over the past six months has stayed at below 1% per month,” Dung said.
Restructuring the banking industry was a major topic, but this had already been discussed in another conference organized the previous day.
At the conference held by Nhan Dan newspaper in Hanoi, Governor Binh sent a clear message that those banks with liquidity difficulties would be the first to be tackled in the coming time.
According to the governor, the central bank will thoroughly solve liquidity problems at weak banks by March next year in a bid to avoid causing bad impacts on the whole banking system.
Roadmap to 2015
“We will drastically carry out solutions to achieve certain changes within next year,” Binh said, adding the central bank next year will handle weak lenders tactically to ensure the public’s benefits.
In 2013, local banks will voluntarily merge with one another to increase their operation scales and strengthen competitiveness.
According to Binh, some 12-15 big local lenders will account for 80% of market share at home and the remainder belongs to smaller ones which are active based on their own rules and in their own market segment. The point is that stronger banks will help weaker ones, Binh stressed.
Besides, the central banks will find ways to improve activities of debt trading companies under credit institutions so that they will deal with bad debts coming from banks along with the Government.
“The nation’s economy will be badly influenced if there is any weak lender and this is the reason why we need to tackle it as soon as possible,” Binh explained. At the same time, he also noted what the nation is confronted with is the need of deploying banking restructuring without letting any bank to go bankrupt.
The banking system’s outstanding loans are equivalent to 116% of the country’s gross domestic product (GDP), while its total assets are about 2.5 times higher than the GDP, Binh reported.
He stated that restructuring the banking system is even more challenging than that of public investment and state-owned enterprises since state-owned commercial banks hold a combined market share of only 48% while the remainder goes to private commercial ones.