With credit growth accelerating in the first quarter, many commercial banks may become more demanding in selecting lending customers. (Photo thoibaonganhang.vn) At the end of the first quarter, average credit growth of theentire banking system hit a six-year high of 4.06 percent. That is the averagerate, so there should many banks with a higher growth rate.
Head of a large-sized bank, who declined to be named, revealedthat his bank’s credit growth in the first quarter was up to more than 8 percent.The bank, therefore, would have to re-balance lending to meet credit growthquota of 16 percent in 2017 allocated by the State Bank of Vietnam (SBV).
The same trend was also witnessed at some small-sized banks.Sacombank, for example, despite facing difficulties in operation, stillannounced its lending rose 4.8 percent in the first quarter 2017.
With high credit growth rate in the first quarter, banks’ capitalflows would, therefore, show signs of changing, with focus on restructuringcustomers’ demands and capital use efficiency.
The head mentioned above said as lending rose sharply right fromthe beginning of the year, his bank would have to be more demanding withprojects and borrowing demands as the SBV permits his bank’s whole year creditgrowth at only 16 percent. Once quantity was controlled, the bank would investmore in quality.
Accordingly, the bank would screen to lend to more secureprojects, with better capital use quality and collaterals. This would furtherenhance credit quality.
“We have noticed this point, therefore we have tightened. We nolonger compete by lending at much lower interest rates compared with depositrates but focus more on customers with higher capital use efficiency. We alsoexcluded customers who displayed signs that they would borrow from our bank atlower interest rates to deposit in other banks with higher interest rates. Withthe current good credit growth prospect, I believe this screening will expandin many banks,” the insider said.
He also noted that high credit growth at the beginning of the yearin some banks is a good sign of the economy’s demand and is an opportunity toscreen customers, but will not lead to 2017 witnessing overheated credit growthbecause besides the strict control of credit growth room for each member thatthe State Bank is ensuring, the capacity of banks is also limited.
Early every year, the central bank assigns credit growth for eachcommercial bank to meet the annual credit growth target of the entire bankingsystem. This year, the central bank plans a credit growth of 18-20 percent forthe entire banking system.
If the SBV does not increase the quotas, commercial banks wouldnot dare to “break” because at the end of 2016, the SBV’s Banking Inspectionand Supervision Agency called each member exceeding the assigned quota to warnthat if they did not adhere to the regulations, they would be subject tosanctions.
The mechanism of assigning credit growth room to each member isalso the basis for the SBV to stand firm against concerns that such a sharpcredit increase may put pressure on inflation and generate overheated growth,because, finally, credit growth limit of the whole sector is still controlled bythe aforementioned mechanism.-VNA
VNA
