Local banks struggle to lure corporate borrowers
By Thanh Thuong - The Saigon Times Daily
HCMC – Local banks are lowering lending rates following the central bank’s move to cut the deposit rate cap to 13% a year, but many of them have found it hard to attract corporate borrowers these days.
A senior executive of a small bank said his bank has set aside a VND1-trillion credit line for enterprises with an annual rate ranging from 18% to 20%. However, the banker stressed, the number of firms asking for loans from his bank has remained inconsiderable over the past month.
With the above lending rates, his institution cannot compete with state-owned or foreign-invested banks in inviting good corporate borrowers.
A HCMC-based executive of Vietnam International Bank (VIB) stated his bank was trying to disburse capital for customers. The problem is that VIB finds it difficult to look for qualified businesses to prevent overdue debts from rising.
For the time being, VIB is offering exporters and importers loans with lending rates 1.5 percentage points lower than normal levels.
Similarly, Oriental Commercial Bank (OCB) since the start of this month has actively enticed clients by slashing interest rates to 18% per annum for all loans within a year.
A source from OCB told the Daily that the lender would be more cautious about giving out credits to minimize bad debts since it was now difficult to have debts settled by customers on schedule.
Meanwhile, Ocean Commercial Bank (OceanBank) has announced a special program targeting clients in fields such as agriculture, fishery and forestry, with a yearly preferential rate 2-3 percentage points lower than those for other loans. Moreover, the Hanoi-based lender has decided on a VND500-billion credit line whose rate is set at about 17% for companies in the nation’s south.
Speaking to the Daily, Le Xuan Nghia, vice chairman of the National Financial Supervisory Commission, pointed out the glut of capital at local banks given the limited number of borrowers. This has prompted a large number of banks to buy Government bonds with less than five-year terms to net a coupon of around 11% a year, Nghia reckoned.
As of last Friday, the total transaction volume of the whole bond market amounted to VND47.575 trillion while the figure only reached over VND73 trillion in all of 2011, according to Bao Viet Securities Co.
Central bank governor Nguyen Van Binh in a press briefing on Monday also said the credit growth rate as of last Thursday had dipped by 1.27% compared to the end of last year. The governor cited the long Lunar New Year holiday coupled with the slackened capital demand as the two reasons for the lower rate.
At a seminar on accessibility to bank loans in HCMC on Monday, local companies attributed the slowing capital demand to high lending rates. Most of them shared the view that the lowering of lending rates by 1-2 percentage points was still of little significance.