Banks look to cash in on higher credit growth

Customers make transactions at a VIB Bank branch in Ha Noi.

The general director of Nam A Bank, Tran Anh Tuan, said his bank was not worried about reaching this target.

According to Tuan, this was the first year the central bank did not set an individual target for each bank's credit growth. Rather, the bank has lifted the lending rate limit for non-manufacturing sectors.

Many believe this will be a chance for banks to boost their credit growth in 2013.

Banks with good liquidity and redundant capital reserves, as well as strategies to provide individual home loan programmes, would be at a particular advantage.

The general director of Eximbank said his bank would set aside VND5 trillion for an individual home loan mortgage programme with a preferential interest rate of 12 per cent per year.

"The interest rate would remain the same for the first two years," he said, adding the bank would accelerate disbursement under the programme this year.

Trinh Van Tuan, chairman of OCB, said the fact that the central bank had nailed down explicit credit policies to provide lending to non-manufacturing sectors, especially the real estate sector, offering a good opportunity for banks to boost their lending.

Yet Tuan also warned that given the current climate of mounting bad debt and inventories and low purchasing power, banks needed to be careful when giving out loans.

In 2013, capital was likely to be set aside for prioritised industries such as exporting, manufacturing and trading sectors, he said.

According to State Bank Governor Nguyen Van Binh, the central bank's monetary policies in 2013 were very cautious and flexible, focusing on curbing inflation and stabilising macro-economic development.

The Governor said this year the central bank could provide capital for credit institutions at more reasonable interest rates to boost lending for prioritised sectors.

According to economist Pham Do Chi, reducing the lending interest rate below 10 per cent per year would encourage businesses to take out loans to expand their production and business.

Meanwhile, member of the National Financial and Monetary Policy Advisory Council Dr Tran Hoang Ngan said the housing market would warm up after the central bank nailed down explicit policies to support this field.

Ngan, however, suggested lending rates be set at 5-6 per cent to support individual home buyers and thaw the frozen property market.

The Governor predicted that the lending interest rate might go down rapidly in the time to come, but also warned about the return of inflation in Viet Nam due to loose monetary policies early this year, saying the central bank will remain cautious.

The central bank confirms that there will be no ceiling interest rates applied for all borrowers. Rather, interest rates will apply to specific sectors: for instance, prioritised sectors will enjoy a 12 per cent lending interest rate per year.

At the same time, to handle difficulties in the real estate market and bad debt problems, the central bank is expected to lend VND20-40 trillion ($80-190 million) to individual home buyers this year to stimulate housing demand.