Banks can continue to increase credit ‘room’

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In the monetary policy management solutions in the second half of the year, the State Bank (SBV) said it would periodically review and adjust credit growth targets with each credit institution on the basis of operating situation, financial capacity and healthy credit growth. Credit institutions that reduce lending interest rates will be prioritized for consideration.

Previously, this agency had just raised the credit targets of many banks. In general, the new target is 40-60% higher than the level at the beginning of the year and lower than 2020. Meanwhile, many banks have used up their limit in the first half of 2020.

MB was upgraded from 10.5% to 15% – one of this year’s highest-level banks. VIB was raised from 8.5% to 14.1% this year, lower than 10.5% to 30% in 2020. A series of other banks such as VPBank have been upgraded from 8.5% to 12.1%, Sacombank has been expanded from 6.5% to 10.5%, Eximbank raised its credit target from 6.5% to 10%.

Some banks that have been granted high growth limits can be targeted such as Techcombank extending the credit room from 12% to 17%, Vietcombank increasing the room from 10% to 14%…   The adjustment was narrower than the previous year. shows the caution of the executive agency in the context of the complicated development of the epidemic.

The SBV will continue to loosen the credit room. Photo: B.L

The executive agency said in order to contribute to supporting the recovery of economic growth before the adverse impact of the Covid-19 pandemic, and at the same time not being subjective to inflation risks. Along with other synchronous solutions, the State Bank of Vietnam adjusted credit growth targets for credit institutions to ensure consistent principles to achieve the objectives of monetary policy management and to implement the Government’s policy of “fighting against the epidemic while at the same time economic development”.

The adjustment of the credit growth target is made on the basis of the credit institution’s request, assessing the operation situation, financial capacity, governance and ability to expand credit in a healthy manner, with priority given to customers. Credit institutions implement the policy of the Government and the direction of the State Bank to reduce lending interest rates in order to share difficulties.

After the call of the State Bank, many banks have announced to lower lending interest rates in July by 1-2%, especially with a 3% decrease like MSB. This move shows the participation of credit institutions in supporting customers and promoting economic recovery, on the other hand, it is not beyond the goal of the SBV to raise more credit targets.

In fact, the limit extended in the second time is still lower than the plan set by some banks this year. For example, MSB set a credit growth target of 30%, while recently it was only allowed 16%. VIB plans to increase 31%, while the State Bank currently allows only 14-15% for the whole year.

SSI Securities Analysis Center – SSI Research expects that the State Bank will have another round of credit target relaxation in the late third quarter or early fourth quarter of this year.

Source: – Translated by