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Becoming more cautious, banks now checking loans   2009-08-26 - VietNamNet/LD

Commercial banks have become more cautious in their lending since the State Bank of Vietnam (SBV) adjusted the targeted credit growth rate from 30 percent to 25-27 percent.


Commercial loaning going more slowly…


In the first six months of 2009, outstanding loans of banks increased more rapidly than their mobilised capital. Mobilised capital increased by 16.2 percent over the end of 2008, while outstanding loans by 17.01 percent.


Meanwhile, in July, outstanding loans grew more slowly than mobilised capital. The deposit balance in July 2009 increased by 2.75 percent over the previous month and 20.92 percent over the end of 2008, according to SBV. Meanwhile, outstanding loans in July increased by 2.15 percent only over June.


The credit growth of the whole banking system has been on the decrease: the growth rate was 2.75 percent in July 2009, while it was over 3 percent in June and 4.2 percent in May. The stable decreases of the credit growth rates have been attributed to the central bank’s decision to lower the targeted credit growth rate from 30 percent to 25-27 percent. The new decision has forced banks to adjust their credit growth rates.


Especially, commercial banks are tightening consumer loaning. DongA Bank’s Deputy General Director Nguyen Thi Ngoc Van said that the bank is now checking loans, filtering clients and adjusting its credit growth. DongA Bank’s credit is forecast to increase by 20 percent only by the end of August. Meanwhile, its credit growth rate reached 30 percent by May 2009.


While banks rushed to push up personal credit in the first six months of the year, they have become more cautious with loans now. They have tightened consumer credit and set up stricter requirements for borrowers.


ABBank said that the bank does not intend to push up lending for securities, while it has also slowed down real estate and consumer loaning, though it well understands that consumer loans bring high revenue to the bank (with consumer loans, banks can lend money at negotiation-based interest rates, while no limit is set for this kind of loaning).


…and so are the loans under interest rate subsidisation programme


Banks have also become more cautious with loans under the interest rate subsidisation programme, which has led to the gradual decrease of disbursement increases. Only seven of 37 commercial banks have provided loans under the long-term interest rate subsidisation programme.


According to Sacombank, it disbursed 3,000 billion dong more in capital in June 2009 than in May, while the disbursed capital in July was higher by only 2,000 billion dong over June. The bank’s outstanding loans by the end of July had reached 49,820 billion dong.


Meanwhile, economists believe that it is necessary to continue the interest rate subsidisation programme. Dr of Economics Tran Du Lich said that the national economy now needs capital to recover from the economic downturn. However, he has suggested that the Government reconsider the list of those eligible under the programme and lower the subsidised interest rate.

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