Banks find it hard to lend

March 19, 2013 | 08:40
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After successfully raising liquidity, and despite low interest rates, many Vietnamese banks have been finding it difficult to find new customers for loans.

Many Vietnamese banks have been finding it difficult to find new customers for loans

According to the State Bank of Vietnam’s HCM City branch, the percentage of outstanding loans held by banks in the city increased by only 0.22pct; meanwhile, while capital from deposits grew by 2.71pct.

Truong Van Phuoc, General Director of Vietnam Export Import Commercial Joint-Stock Bank (Eximbank), said that between January and February, the country saw a trade surplus of $1.68 billion, which showed decreased demand for imports. At the same time the financial situation at many businesses wary of taking out loans.

Currently, banks commonly offer annual interest rates of 11pct to 15pct, with preferential rates between 9 and 12pct, with medium to long-term rates averaging between 14pct and 17pct. Still they have largely failed to find new customers.

The deputy general director of a bank in HCM City said that businesses have tended to prefer long-term loans with low interest.

Truong Quang Vinh, Chairman of Go Vap District’s Enterprise Association, added that many companies failed to meet requirements for loans, and that even enterprises requesting capital for projects that have already been approved for their feasibility were turned down due to outstanding debts.

A consultant with a bank in HCM City said that it was essential for the State Bank of Vietnam to step in and offer a workable plan for banks to settle the bad debt problem, adding that offering loans to businesses with outstanding debts would be a step in the wrong direction.

According to Dr. Le Xuan Nghia, member of the National Monetary Policy Advisory Council, in order to properly deal with the situation of banks being unable to find new customers to lend to, many commercial banks have significantly cut interest rates.

Many banks have moved towards purchasing G-bonds or providing inter-bank loans.

NLD, dtinews

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