Lending a tall order for banks

July 28, 2011 | 08:25

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Promoting lending is tough for banks facing high deposit rates.

illustration photo

Sacombank just saw a 3 per cent hike in lending in the last six months against late 2010. The southern bank has much room to hike lending in the remaining months of the year.

The bank’s general director Tran Xuan Huy, however, said promoting lending was challenging amid a hostile business climate and the rates could not fall down since deposit rates remained high.

Similarly, DongA Bank posted 8 per cent hike in lending in the same period. The bank’s negotiable lending rates fluctuate between 21-22 per cent per year.

“In fact, the bank usually abounds with customers who are in need of capital, but we must be cautious in lending to avoid bad debts,” said the bank executive.

The situation is no better for smaller banks. According to OCB and WesternBank representatives, their lending growth remained modest in the first over six months.

A senior State Bank expert said banks had fruitful capital sources as customers hesitated to take loans with high lending rates.

“The interest rates will soften in line with a sliding consumer price index and follow central bank’s commitment to pull down the rates,” the expert said.

The expert also assumed 10 per cent lending growth in late July would be appropriate given present development context.

According to Ho Chi Minh City Statistics Office, the city’s total lending was an estimated VND758.7 trillion ($3.66 billion) in late July 2011, up 23 per cent on-year and 7 per cent more than early 2011. Of which, dollar lending was VND230.3 trillion ($1.11 billion), representing 30.4 per cent of total and soaring 30.4 per cent on-year whereas dong lending surged 19.2 per cent on-year.

By Thuy Vinh

vir.com.vn

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