Banks are holding firm on their decision not to lend to unreliable creditors despite modest credit growth and the year coming to a close. Vietnam Investment Review reports.
Last month, State Bank of Vietnam (SBV) green-lighted banks to lend to firms with bad credit if they have feasible investment projects and most bank executives have said they prefer to stay tight with capital.
“Banks can’t control how firms will use this money and if it used to pay back old debts rather than going into production or business plans, the banks will be the one who pay the ultimate debt,” said Eximbank chairman Le Hung Dung.
Eximbank’s credit grew by 8 per cent by the end of October and is likely to hit 10 per cent, significantly under the bank’s target of 15 percent.
“Despite modest growth, Eximbank will not loosen its lending requirements; our foremost thought is credit quality,” said Dung.
General director of Ho Chi Minh City-based Nam A Bank Tran Ngo Phuc Vu said that although non-performing loans (NPL) are now somewhat under control, banks still need to carefully review customer credit records and real payment ability before lending to a firm with a poor credit history, not only leverage on the potential of a project.
Sacombank general director Phan Huy Khang said that amid credit difficulties, quality was most important. Besides collateral and lending requirements, a major decisive factor was project feasibility.
Khang said banks were better off being cautious in lending, as they were not out of the woods with bad debts yet.
The bank’s credit growth was estimated at approximately 15 per cent by the end of October, against a target of 20 percent.
According to SBV Ho Chi Minh City branch deputy director Nguyen Hoang Minh, city-based banks’ bad debts stand at around 6.2 percent of total outstanding loans, around the same as last year.
As such, banks cannot loosen up on credit controls just to boost lending, and need to keep quality at the forefront.
Minh also said the expectation lending may escalate by year-end period as usual would hardly be realisable and it was extremely hard for the banking sector to achieve 12 percent credit growth as projected this year.-VNA
Last month, State Bank of Vietnam (SBV) green-lighted banks to lend to firms with bad credit if they have feasible investment projects and most bank executives have said they prefer to stay tight with capital.
“Banks can’t control how firms will use this money and if it used to pay back old debts rather than going into production or business plans, the banks will be the one who pay the ultimate debt,” said Eximbank chairman Le Hung Dung.
Eximbank’s credit grew by 8 per cent by the end of October and is likely to hit 10 per cent, significantly under the bank’s target of 15 percent.
“Despite modest growth, Eximbank will not loosen its lending requirements; our foremost thought is credit quality,” said Dung.
General director of Ho Chi Minh City-based Nam A Bank Tran Ngo Phuc Vu said that although non-performing loans (NPL) are now somewhat under control, banks still need to carefully review customer credit records and real payment ability before lending to a firm with a poor credit history, not only leverage on the potential of a project.
Sacombank general director Phan Huy Khang said that amid credit difficulties, quality was most important. Besides collateral and lending requirements, a major decisive factor was project feasibility.
Khang said banks were better off being cautious in lending, as they were not out of the woods with bad debts yet.
The bank’s credit growth was estimated at approximately 15 per cent by the end of October, against a target of 20 percent.
According to SBV Ho Chi Minh City branch deputy director Nguyen Hoang Minh, city-based banks’ bad debts stand at around 6.2 percent of total outstanding loans, around the same as last year.
As such, banks cannot loosen up on credit controls just to boost lending, and need to keep quality at the forefront.
Minh also said the expectation lending may escalate by year-end period as usual would hardly be realisable and it was extremely hard for the banking sector to achieve 12 percent credit growth as projected this year.-VNA
