Credit on banks’ lips

Maritime Bank’s deputy director Tran Xuan Quang said the bad debt malaise and ailing firms would continue hampering banks’ credit growth this year despite the State Bank (SBV) endeavors to loosen the credit valve into non-priority areas like the real estate sector.

Right from outset of 2013, bank executives urged their branches to stimulate credit growth. Accordingly, transaction staff members were told to thoroughly grasp their clients’ needs to help them disentangle.

In early 2013, the SBV asked banks to tackle production and business hardships by hook or by crook, striving for credit expansion compatible to their deposit volumes. Bank executives, however, said 2013 could possibly be another challenging year for the banking sector.

Eximbank general director Truong Van Phuoc said the bank’s credit growth remained modest until present though early year the credit division was required to strengthen ties with firms to fuel lending.

A credit division staff at Maritime Bank said its customers in the first two days after the long Lunar New Year (Tet) holidays were mostly depositors and there were almost no borrowers.

Many economists assumed credit situation in 2013 would be likely to replicate what had happened in 2012. In fact, the banking sector credit contracted 1.96 per cent in the first quarter of 2012 and contracted around 1 per cent in January 2013 and negative growth was expected to linger this February.

LienVietPostBank deputy chairman Nguyen Duc Huong said despite copious capital sources, throngs of banks did not dare to boost lending on the back of their high non-performing loan (NPL) rates. Hence, credit could not grow quickly before the national asset management company (AMC) was founded and partook in troubleshooting the bad debt malaise. The bank reportedly wants 30 per cent credit growth in 2013, but it was worried AMC’s late presence could adversely afflict the bank’s growth targets.

A top executive of another commercial bank said: “Some banks have only concentrated on mobilizing, while neglecting lending to ensure liquidity. Dodging the ceiling raising rate regulation is still a fact of life in the current context which explains why the interest rate could hardly go down.”

“The AMC coming into service and banks’ restructuring are vital to unblock the current credit hurdles,” added the bank leader.