Qualified banks expect higher credit growth quota in coming months

VIETNAM, August 13 –

HÀ NỘI — Some qualified commercial banks are expected to obtain higher credit growth quotas from the State Bank of Việt Nam (SBV) in the coming months.

According to the Bảo Việt Securities Company (BVSC), the SBV is expected to announce a credit expansion for commercial banks at the end of the third quarter of 2022 or the beginning of the fourth quarter of 2022, since most banks have so far used the major part of their assigned credit quota. .

However, as the SBV has so far decided to keep the credit growth target unchanged at 14% in 2022, the selection of banks to obtain a higher credit growth quota in the remaining months of this year will be tightened.

According to SBV rules, the granting of credit growth quota will be based on the asset quality and scale of operation of each bank in accordance with Circular 52/2018/TT-NHNN. Specifically, the SBV will rank banks on six criteria, including capital, asset quality, governance, business performance results, liquidity and market risk sensitivity.

The SBV will also consider a number of other criteria related to implementation by banks to respond to government and SBV policies and guidance, such as reducing interest rates on loans to support businesses and people, the concentration of lending on businesses and production and participation in supporting the management of fragile banks.

According to the criteria, MB, Vietcombank, VietinBank, BIDV and Agribank are expected to achieve higher credit expansion than others in the upcoming quota allocation as banks have been the strongest supporters of the economy during the COVID pandemic. -19.

In addition, MB and Vietcombank also participate in the restructuring of weak banks in the form of compulsory transfer. Therefore, both banks will get a higher credit growth quota not only in the second half of 2022, but also in the following years.

MB implemented a plan to receive a mandatory transfer from OceanBank. The bank’s vice president, Lưu Trung Thái, said the cooperation with OceanBank was both a political task and an opportunity for MB to expand its operational scale. MB will coordinate with OceanBank to verify their data system before developing a plan to submit to the government.

Meanwhile, Vietcombank is also working on a compulsory transfer from Construction Bank (CB).

Meeting SBV’s criteria, BVSC estimates that Vietcombank can be allowed to extend its credit line to around 19% in 2022, while the number for MB will be around 25%.

Apart from the above banks, VPBank can also get a higher credit quota because the bank has considered a plan to receive a compulsory transfer from a weak bank.

After a period of growth overheating which caused interest rates and inflation to accelerate in Việt Nam, the SBV decided to grant an annual credit growth quota to each bank to control the credit growth cap in 2011. Currently, very few countries in the world still use a growth credit granting tool like Việt Nam.

Experts say removing the credit growth limit is necessary, but not immediate, and should be on a roadmap. For example, the SBV announces within five years that it will abolish the credit limit. During these five years, the SBV will instruct commercial banks on how to stress test and resolve bank weaknesses, and also deal with weak banks, with regulations on data verification and responsibilities. If there is no specific time, no bank will do it.

Instead of controlling the credit growth cap, the SBV should control credit growth through capital standards according to Basel, combined with modern bank management tools such as periodic checks. This still creates a credit limit for banks, but on a more quantitative, objective and transparent basis.

Dr. Cấn Văn Lực, member of the National Financial and Monetary Policy Advisory Council, said News from Việt Nam that the SBV should abolish the mechanism for granting line of credit and managing credit growth through the banks’ capital adequacy ratio.

“This credit limit granting mechanism should only be a temporary solution for the next one or two years,” Lực said.

According to the latest data released by the SBV, credit growth for the entire banking system as of July 26 reached 9.42%. With a credit growth target of 14% in 2022, credit can grow by almost 4.6% in the last five months of this year, which equates to approximately VNĐ478 trillion. —VNS