Credit growth to be in the right direction

Since early this year, credit growth of provincial banking system has been stable. Representatives of provincial banks said, banks would ensure the fulfillment of credit growth target of 18% in 2016.

Steady growth

Currency market movements in Binh Duong in the past 9 months showed that 20162016 was the first year, when credit growth had a big difference compared to the past several years, spread evenly over months, instead of low or negative growth, then soared sharply at the end of the year.

Mr. Nguyen Thai Minh Quang, Director of Vietcombank Binh Duong, said with flexible solutions, deposit interest rates in recent months had been stabilized by the bank, reducing the pressure on lending rates. There are now many businesses taking loans for business production of Vietcombank and enjoy an interest rate of 6.5%/year, some businesses receive preferential credit packages with interest rates only 5.5 to 6%/year ... This is a reasonable interest rate that credit and deposit growth of Vietcombank increased respectively by 15% and 22% compared to the year-beginning.

The credit structure of provincial bank in the past 9 months continued to shift positively, focused on priority areas of the province. Photo: Customers made transactions at VietCapital Binh Duong Branch (Thu Dau Mot City)

Likewise, in the past 9 months, total outstanding loan of BIDV Binh Duong Branch reached VND2,000 billion, up 10% compared to the same period of 2015.

Credit evolution has facilitated State banks, while commercial banks were also gaining good growth rates. These results made the banking credit’s picture in the past 9 months brighter.

Mr. Bui Van Nu, Director of State Bank Binh Duong branch, said that in the past 9 months, credit policy had been implemented flexibly, credit structure continued to shift in a good direction towards priority areas. Besides, credit growth has been stable, because the province has implemented proper accommodative economic policies, stable investment environment, and banks have made timely financial supports to facilitate business expansion.

BIDV Binh Duong, with credit growth target at around 18% of the province, has deployed several solutions. In particular, the bank has intensified marketing activities and relationships to businesses, investors in new industrial zones in the province to learn about capital needs, offer advices and address lending needs.

Gathering capital for production and business

One solution has proved its efficiency is lending rates have been flexibly adjusted by commercial banks to create a favorable supply of capital for business. Accordingly, the common level of lending interest rate to priority areas is at 6-7%/year (short-term); State banks continue to apply an interest rate of 9-10%/year for mid- and long-term loans of priority areas. Meanwhile, lending rate for normal manufacturing sectors is at 6.8 - 9%/year (short-term), and 9.3-11%/year (mid- and long-term).

As a result, total outstanding loan by the end of Sep was estimated at VND111,565 billion, up 17.21% over the beginning of 2016 and up 24.8% over the same period in 2015; total deposit reached VND136,054 billion, up 17.7% over the beginning of the year and up 26% over the same period in 2015. One noticeable thing is that, bad debt was at only 0.98% out of total outstanding loan.

According to Mr. Bui Van Nu, during 9 months, in a difficult context of the business sector, the capital flow into the priority areas, such as small and medium-sized enterprises; agricultural, rural development under economic programs; housing programs ... gained good growth rates. This is considered as a high growth rate over the same period in recent years and in line with the target of 18% in 2016.

"Currently, credit in the remaining months of 2016 is being carried out quite smoothly. State Bank of Vietnam will review and approve growth targets of each credit institution as arising demands for credit growth. In contrast, with this mechanism, credit institutions with high bad debt and outstanding loans focusing too much on risky areas… might be limited to credit growth target”, said Mr. Nu.

Reported by Thanh Hong – Translated by Ngoc Huynh