Banks run out of credit quotas
Many large-sized commercial banks have no scope for credit growth for the last months of the year, as they have used nearly all the quota allowed by the central bank.
BIDV, SHB, Nam A Bank, MB, ACB and Sacombank said they had only one to three percent of credit growth left for this year.
Some other banks used up their 2015 quota in the first half of the year itself.
SHB said its H2 credit growth quota would be only 1.1% as its H1 lending rose to 13.9% out of the 15% allotted annual quota.
It is difficult for SHB to retrieve its outstanding loans as up to 56% of them are medium and long-term loans. Short-term loans have been disbursed by the end of June.
Therefore, the profits of the bank, whose credit growth quota last year was 36%, will be affected negatively to a significant extent.
With only three percent of the credit growth left for the last few months of the year, MB and ACB will also have to ask the central bank for more credit quota.
If the banks fail to ask for more quota, their profits in the second half of the year will be reduced significantly. According to the H1 financial reports of banks, credit is the main contributor to their profits.
Besides, slow rise in lending can cause non-performing loans to increase.
Experts are concerned that a slow credit growth of large banks in the last few months of the year could impact businesses negatively, as their capital demand often rises sharply in this period.
The experts said an expansion of the credit quota was not so difficult for the central bank, but commercial banks must ensure their liquidity and prioritise eligible borrowers.
However, following the recent devaluation of the dong, experts said the central bank could tighten idle capital sources in order to prevent a speculation in American dollars.
The central bank, therefore, might have to scrutinise the credit growth quota of each bank, they said.
It has applied a credit growth quota for each commercial bank in the past few years in a move to avoid the overheated growth of 2009, when a lending spree caused serious consequences, not only to the banking system but also the entire economy.
Some other banks used up their 2015 quota in the first half of the year itself.
SHB said its H2 credit growth quota would be only 1.1% as its H1 lending rose to 13.9% out of the 15% allotted annual quota.
It is difficult for SHB to retrieve its outstanding loans as up to 56% of them are medium and long-term loans. Short-term loans have been disbursed by the end of June.
Therefore, the profits of the bank, whose credit growth quota last year was 36%, will be affected negatively to a significant extent.
With only three percent of the credit growth left for the last few months of the year, MB and ACB will also have to ask the central bank for more credit quota.
If the banks fail to ask for more quota, their profits in the second half of the year will be reduced significantly. According to the H1 financial reports of banks, credit is the main contributor to their profits.
Besides, slow rise in lending can cause non-performing loans to increase.
Experts are concerned that a slow credit growth of large banks in the last few months of the year could impact businesses negatively, as their capital demand often rises sharply in this period.
The experts said an expansion of the credit quota was not so difficult for the central bank, but commercial banks must ensure their liquidity and prioritise eligible borrowers.
However, following the recent devaluation of the dong, experts said the central bank could tighten idle capital sources in order to prevent a speculation in American dollars.
The central bank, therefore, might have to scrutinise the credit growth quota of each bank, they said.
It has applied a credit growth quota for each commercial bank in the past few years in a move to avoid the overheated growth of 2009, when a lending spree caused serious consequences, not only to the banking system but also the entire economy.