Bringing down lending rates to non-productive sectors is challenging banks.
Many bank executives said pulling down lending rates to non-productive sector to no more than 22 per cent as of June 30 and 16 per cent as of December 31, 2011 was not a simple task.
Kien Long Bank’s general director Truong Hoang Luong said the bank had made a great stride to drive non-productive sector lending rates down to 22 per cent as of June 30.
The rate is around 20.3 per cent at the Ho Chi Minh City Housing Development Bank (HDBank). The bank’s deputy general director Dam The Thai said HDBank would continue taking back loans from non-productive sector and focus on supporting production, manufacturing, agriculture and rural areas.
The door to personal loans is also ring-fenced as smaller joint stock banks wanted to be certain they would pull down the lending rate to non-productive sector to 16 per cent by the year’s end, Thai said.
OCB general director Trinh Van Tuan said though the bank succeeded in bringing down the rate to 21 per cent by late June 2011 it had stopped lending to securities and property areas and restricted personal loans.
Tuan said as the consumer price index (CPI) was eased in June and was forecast to further go down in the upcoming months, the State Bank should consider relaxing current lending requirements towards banks.
“The State Bank may consider whether allowing banks to keep the lending rate to non-productive sector at 22 per cent as presently instead of 16 per cent as required,” Tuan said.
OCB’s lending growth was more than 7 per cent currently against late 2010.
Western Bank general director Dang Duc Toan said the bank’s lending rate to non-productive sector was kept below the permissible level prior to June 30 deadline and it now stayed at around 20-21 per cent. To bring it down to 16 per cent by the year’s end, the bank would gradually take back loans from securities, property and even personal loans, Toan said.
State Bank Ho Chi Minh City branch office director Ho Huu Hanh said six joint stock banks in the city still failed to meet central bank requirement as of July 1, 2011. Hanh, however, refused to declare those bank names and said his branch forwarded a report about it to central bank and wait for State Bank’s guidance.
According to State Bank reports, the banking sector’s outstanding loan growth was 7.05 per cent as of June 10, 2011 against late 2010, of which dong lending rose 2.72 per cent in amount and dollar lending rose 22.21 per cent.
The production sector’s outstanding loans hiked around 11 per cent and made up 83 per cent of total loan structure.
Lending to agriculture and rural areas surged 25 per cent and to export sector up 25.8 per cent. Non-productive sector outstanding loans slide 9.46 per cent in amount and made up 16.9 per cent of total against 18.8 per cent in late 2010.
The property sector’s outstanding loans were around VND222 trillion ($10.7 billion) as of June 10, 2011 against VND235 trillion ($11.35 billion) in late 2010.
By Thuy Vinh