Vietnamplus

Banks are forecast to have a credit expansion at the end of the third quarter of 2022, according to Saigon Securities Incorporation.

The State Bank of Vietnam (SBV) has extended the credit growth limits for the third time this year to some commercial banks to meet rising capital demands at year-end.

Banks have been promoting the mobilisation of medium- and long-term capital through bond issuance to meet the State Bank of Vietnam (SBV)’s requirements on capital adequacy ratio (CAR).

From now until the end of the year, the State Bank of Vietnam will review and consider revising credit growth targets for credit institutions and priority is expected to be given to those that reduce loan interest rates.

Techcombank has reported before-tax profit of 5.5 trillion VND (238.1 million USD) in the first quarter of the year, increasing 76.8 percent from the same period last year.

The Vietnam Joint Stock Commerical Bank for Industry and Trade (VietinBank) reported pre-tax profit of 16.45 trillion VND (712.4 million USD) and a bad debt ratio of under 1 percent for 2020.

The application of Basel II is considered the fundamental restructuring solution creating the foundation for promoting the safety, healthy development and competitiveness of the banking system.

Capital difficulties are putting pressure on some banks struggling to meet the central bank’s Basel II deadline of early next year, but experts suggest the central bank should not delay the process.

Banks are advised to have meticulous consideration before lending BOT and BT infrastructure projects as outstanding loans for the projects are likely at risk of turning into non-performing ones.

The State Bank of Vietnam (SBV)’s Governor or the directors of SBV’s municipal and provincial branches will be able to lace credit institutions under the SBV’s special control, starting from next month.

Banks have increased their interest rates on certificates of deposit (CDs), bringing them in excess of 10 percent per year with the aim of mobilising long-term capital.

Banks have been the main player in the corporate bond market so far this year, with eight of the top 10 biggest issuers being financial institutions.

If banks cannot increase charter capital, they’ll have to reduce credit growth, which could harm the provision of capital to serve economic development.

Many of them have paid dividends in shares, issued bonus stocks, or even asked to retain their dividends.

While private joint stock banks have had some success in raising their charter capital, major banks, except for Vietcombank, are still struggling with this work.

Some experts have said when a bank is unable to have a minimum capital adequacy ratio (CAR) of 8 percent for a long time, it could be put under special control by the central bank.

Authorities have basically agreed on the State Bank of Vietnam (SBV)’s proposal to allow large State-owned commercial banks to retain their dividends or pay them in shares to increase capital.

The State Bank of Vietnam has approved the plan submitted by the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) to issue bonds worth 10 trillion VND (427.4 million USD).

Capital adequacy ratio of the banking system is not reliable when some commercial banks invest in mutual bonds, making "virtual improvement" of this coefficient.

The capital adequacy ratio (CAR) of Vietnam's credit institutions has improved thanks to their increased equity.