Local banking sector bound for high growth, but stability needs to be ensured

In 2015, the State Bank of Vietnam (SBV)’s Binh Duong branch set a target on credit growth at 14%-16%. As a result, its credit growth was higher than expected with a structure of capital source meeting targeted people’s demand for capital.

Banks finishing successfully

Some credit institutions slightly increased or reduced deposit interest rates for all terms by 0.1%-0.2% in the last months of 2015, due to objective reasons from the currency market. In 2015, the SBV and commercial banks continuously decreased their deposit interest rates from 10% in early year to 6.5% by the end of the year. But, the amount of deposit at banks in 2015 still reached more than VND112.11trillion, a year-on-year increase of 15.8%.

 Clients making transactions at Bao Viet Bank’s Binh Duong branch

Whilst, there was a slow growth in total outstanding loans. As of late 2015’s quarter 3, the total outstanding loans for the economy grew by 12.9% against early the year. Thanks to being proactive to seek the way out for capital source, province-based credit institutions also had a successful year with impressive growth targets. Noticeably, their total outstanding loans last year gained more than VND92.62bln, a year-on-year increase of 17.15%.

Tran Ngoc Linh, Director of the Bank for Investment and Development of Vietnam (BIDV)’s Binh Duong branch said that market signs from free trade agreements, enterprises’ thriving in business opportunities together with the efforts by BIDV’s Binh Duong branch in seeking clients helped the branch speed up credit growth in the last 2 months of the year. As of Dec.31, 2015, the branch’s total mobilized capital and lending capital increased by 17% and 10%, respectively compared to late 2014.

Credit’s quality under scrutiny

According to the assessment of the SBV’s Binh Duong branch, the local banking sector last year made strong changes in both quality and quantity. Noticeably, the sector actively contributed to maintaining the local economic growth at a high level for many consecutive years. The sector’s total outstanding loans for short-term lending reached over VND74.66trillion, up 11.22% compared to 2014; over VND35.43trillion for middle-term lending, up 28.18%. Total bad debt was VND1.04trillion or 1.1% of total outstanding loans.

Nguyen Phu Cuong, Deputy Director of the SBV’s Binh Duong branch said that the local banking credit investment last year focused on fields encouraged by the local administration. For the National Target Program on New Rural Construction, province-based banks gave priority to providing loans for agriculture and rural development, ensuring growth in accordance with the local orientation. They also implemented the State’s credit policies and offered a huge financial support for the province to realize home loan programs with 544 borrowing forms, provide VND220bln in loan with preferential lending rate from the VND 1 trillion credit package…

In 2015, the local banking system saw a considerable breakthrough in credit growth compared to previous years. This showed that the province’s demand for capital was very great. According to leaders of the SBV’s Binh Duong branch, in 2016, the branch has put forward a major group of measures to well realize the sector’s management strategy. In a bid to improve its operational quality, especially closely controlling over the quality of credit, the sector has set forth a target on credit growth at 13%-15% with effective, safe and sustainable elements ensured.

Reported by Thanh Hong-Translated by K.T