SBV warns 15 banks against risky lending

Last update: 17:08 | 12/01/2018

The State Bank of Vietnam (SBV) has issued warnings to 15 commercial banks as they have offered too much credit for some high-risk sectors, news website Dan Tri quoted SBV deputy governor Dao Minh Tu as saying on January 9.

At a conference on January 9 on the implementation of the banking sector plan this year, Tu neither name names nor point out the risky areas where loans were made. But real estate and stock trading have been repeatedly mentioned as the areas that may put banks at risk. He however noted credit grew 18.17% last year, nearly matching the target of 18%, and the majority of loans were offered for production and business sectors.

As of November last year, loans rose by 22.13% in supporting industries, 20% in hi-tech enterprises, and 22.1% in agriculture and rural development, which are prioritized by the Government.

Lending to high-risk sectors was put under control. Loans for the real estate sector grew by 8.56%, accounting for 6.53% of total loans, lower than the respective rates of 12.86% and 7.71% in the same period in 2016. In addition, loans for the securities sector made up a negligible proportion.

Particularly, the Government’s program to provide loans for priority sectors posted positive results. It was noteworthy that credit grew from early last year, helping supply capital for production and business activities in the context of slow disbursement.

Besides, the efficient management of SBV facilitated the issuance of Government bonds with long terms and annual interest plunging by 0.57-1.89 percentage points.

Despite achievements of monetary policies last year, SBV deputy governor Nguyen Thi Hong said the banking system should continue to improve its management to ensure the sustainable development in the coming time.

The credit-to-GDP ratio remains high (130%), in which medium- and long-term outstanding loans accounted for large proportions while deposits at banks mainly come with short terms, putting pressure on the banking sector.

Loans for priority sectors have grown well, contrary to loans for small and medium enterprises due to their limited financial ability, prestige and production and business plans.

Large amounts of foreign currencies have been bought to facilitate State capital divestments, meaning the injection of huge volumes of Vietnam dong, which requires the close cooperation of ministries and agencies in inflation control. Exchange rates and the foreign exchange market are stable but still fragile.

Commercial banks have encountered numerous difficulties in settling bad debts while the margin between interest rates for loans and deposits is narrower than recommended by prestigious international organizations, causing difficulties for SBV in reducing lending rates.

This year, SBV will continue curbing inflation, stabilizing the macro-economy and the currency market, supporting economic growth and ensuring the effective operation of the banking system. The central bank expects total money supply to increase 16% and credit 17%. 


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