Banks eye higher credit growth, profits

Agribank hopes to achieve 14-18 percent credit growth and at least 10 percent profit.

Private banks too expect credit growth to be higher this year than last year, thus boosting profits.

For instance, ACB targets 18 percent expansion.

This was because for a long time banks’ profits have relied mainly on credit, particularly in the case of small banks.

In fact, for many small banks, 80-90 percent of profits come from credit-related activities.

Many economic sectors are forecast to recover strongly this year, possibly giving banks’ lending plans a boost.

But analysts are unsure, saying stepping up lending is not an easy task.

A central bank official said this year bank lending would be closely controlled, especially long- and medium-term loans to high-risk customers, including those involved in property and in build-operate-transfer and build-transfer transport projects.

The central bank will also focus on improving credit quality and lending to businesses in priority sectors, meaning banks will not have many opportunities for high credit growth.

A member of the Advisory Council on National Financial and Monetary Policies also said achieving high credit growth this year would be a challenge.

To expand credit, it is necessary to further cut interest rates, particularly on medium- and long-medium loans, but it is not an easy task because costs continue to rise due to high deposit interest rates, he said.