Banks struggle to mobilize capital

As many banks have almost reached the lending cap set for the whole year, they are now seeking ways to mobilize funds to meet the demand for loans among individual and corporate customers that tends to surge towards the end of the year, reported Thanh Nien newspaper.

Late last month, Technological and Commercial Joint Stock Bank (Techcombank) was the first bank to be allowed to increase its credit growth limit from 14% to 20% this year. Thus, Techcombank may offer an additional VND10 trillion (US$430.2 million) this year.

Meanwhile, many other banks have reached their maximum credit growth of 14%-15% since early this quarter. Bank for Foreign Trade of Vietnam (Vietcombank), for example, reached the lending cap set for the whole year of 15% in the January-September period, having offered loans totalling VND616.4 trillion.

Other banks, such as HCMC Development Joint Stock Commercial Bank, Asia Commercial Bank, Military Bank and Vietnam Bank for Industry and Trade, have also nearly reached their quotas, with respective credit growth rates of 14%, 11%, 10.7% and 12.8%.

During the rest of the year, banks will prioritize pumping capital into production and business activities while tightening credit for the real estate sector.

Banks will also collect real estate-related debts to provide loans for customers in need of capital for production and business development.

In addition, they have requested the State Bank of Vietnam (SBV) to set higher credit limits.

Vietcombank Chairman Nghiem Xuan Thanh noted that even though the bank has reached its credit growth rate for this year, it would review and restructure its loans to secure its operations, instead of proposing a higher credit cap.

The central bank had earlier set specific credit growth rates for banks to ensure the sustainable credit growth of the whole sector, thereby helping the nation achieve gross domestic product growth of 6.7% and keeping inflation under 4%. However, it should adjust the lending caps for banks as some banks have reached and even exceeded the limits, while others have reported slow growth as of last quarter.

SBV should also withdraw capital through open market operations and the issuance of G-bonds.

Dinh Tuan Minh, a financial expert, noted that SBV has urged commercial banks to manage capital and risks based on Basel II standards. He proposed allowing banks to control their own operations in line with lending regulations.

According to an SBV report sent to the National Assembly, as of early this month, the banking system recorded a credit growth rate of 9.89%, well below the 11.73% seen in the same period last year and the target of 17% set for this year.

In August, SBV directed banks to continue controlling their credit growth and quality, stating that it would not raise the lending limits for commercial banks.

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