06/09/2017 | 17:05:34

Eight-month credit growth rate touches 11.5 percent

Source: National Financial Supervisory Commission

Credit growth rate in the first eight months of 2017 has been estimated at 11.5 percent compared to the end of 2016, the National Financial Supervisory Commission (NFSC) reported.

As per the report, this figure is 1.3 percentage points higher than the first eight months of 2016.

Short-term loans rose by 14.1 percent, accounting for 45.9 percent of total outstanding loans, while medium- and long-term lending grew by 8.8 percent, making up 54.1 percent, the NFSC report said.

The proportion of credit in VND in total outstanding loans rose by 11 percentage points to 91 percent. Notably, the credit in foreign currency jumped by 11.5 percent compared to the same period last year. In 2016, the growth rate of foreign currency credits in the first eight months was only 1.7 percent.

From January to August, the banking system’s deposit growth rate was 9 percent; the figure in the corresponding period last year was 11.4 percent.

In terms of interest rates, the State Bank of Vietnam (SBV) said the average interest rates for short-term loans stood at 6.8 to 9 percent per year, and for medium- and long-term loans at 9.3 to 11 percent.

Lawyer Bui Quang Tin, CEO of BizLight Business School, said there are several factors that could help reduce interest rates or stabilise them in the coming months. One factor is abundant liquidity in commercial banks, which could help satisfy the spike in credit demand in the last quarter of the year.

Also, the central bank has been continuously buying the US dollar to increase the foreign reserve; inflation is being controlled actively; and inter-bank interest rates have dropped to the lowest level since the beginning of 2017, Tin said.

However, financial and banking expert Nguyen Tri Hieu said reducing interest rates by a further 0.5 percentage points is only feasible if the SBV increases buying bonds from commercial banks to supply more money to the market. Since the beginning of the year, credit growth has been higher than deposit growth, so without the SBV’s support, commercial banks would probably have to increase deposit interest rates to raise more capital.

Hieu warned that bond buying, however, might push up inflation.

He also stressed the importance of settling bad debts to further reduce lending interest rates, as currently, banks have to set aside large provisions for bad debts, which raises their costs.

The annual interest rates for deposits ranging from one to below six months averaged at 4.5 to 5.4 percent; those with terms between six and 12 months at 5.4 to 6.5 percent, and for over 12 months at 6.4 to 7.2 percent.

The total post-tax profit of credit institutions in the first seven months of 2017 touched 41 trillion VND (1.8 billion USD), a 60 percent surge on the same period last year, mostly thanks to lending and services provision activities.
 
As of June 30, bad debts of credit institutions amounted to 157 trillion VND, a 21.5 percent rise compared to the end of 2016, accounting for 2.9 percent of total outstanding loans.-VNA

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