Sebastian Eckardt, lead economist of the World Bank in Vietnam, has recommended the State Bank of Vietnam (SBV) to remove the credit growth quota set for each year and let the market determine the credit demand in the economy on its own, as the capital adequacy ratio (CAR) is not deemed sufficient. He advocated the abrogation of administrative measures limiting banks’ credit growth and supported the idea of controlling such growth by a safety ratio instead. However, he also warned about the high credit-to-GDP ratio in Vietnam. According to the ‘Taking stock: An update on Vietnam’s recent economic developments’ report released by the World Bank in December 2018, although local monetary policies remain accommodative, credit conditions have been tightened. The SBV trimmed its credit growth target to 17 per cent in 2018 from the 18 per cent set in the previous year. The monetary authority has also reinstated its view on controlling lending to high-risk sectors, … [Read more...] about Is it time to wave good bye to the credit growth ceiling?
3 agency credit report
Governor of the State Bank of Viet Nam Le Minh Hung has urged credit institutions and foreign banks’ branches to further speed up the settlement of non-performing loans (NPLs). Under Document No 8425/NHNN-TTGSNH issued last week, the Governor instructed the institutions to better implement Directive No 05/CT-NHNN, which was issued in September to regulate the structure of credit institutions associated with dealing with bad debts in the 2016-20 period. Accordingly, credit institutions must review and provide detailed roadmaps and solutions for settling their bad debts every year until 2022. Credit institutions are also required to actively look for buyers for the debts they sold to the Viet Nam Asset Management Company (VAMC). Previously, banks had to sell their debts to the VAMC to keep their NPL ratios below 3 per cent as regulated by the central bank, but they still had to make provision for the debts. Meanwhile, the recovery of debts at the VAMC remains slow. Hung also asked … [Read more...] about Credit institutions urged to resolve bad debts
Banks report high bad debts despite handsome profitsThe Saigon Times Daily Customers are seen transacting at an office of Techcombank. Local banks reported high bad debts despite handsome profits last quarter - PHOTO: THANH HOA HCMC – Although many commercial banks achieved positive business results with high profits last quarter, bad debts increased sharply in the period, according to Lao Dong newspaper. Most banks have publicized their financial reports for quarter three. Accordingly, 21 out of 26 banks have reached 70% of their full-year targets, while giants in the banking system, such as Bank for Foreign Trade of Vietnam (Vietcombank), Bank for Investment and Development of Vietnam (BIDV) and Technological and Commercial Joint Stock Bank (Techcombank), have achieved 90% of their targets for the whole year. High profits reported Local banks posted a combined pretax profit of more than VND67 trillion (US$2.9 billion) in the quarter three, surging 41% year-on-year. … [Read more...] about Banks report high bad debts despite handsome profits
VietNamNet Bridge - The world’s leading credit rating firms have ranked Vietnamese commercial banks at higher positions this year, reflecting the success of monetary policy and efforts made by commercial banks. Moody's Investors Service on August 14 upgraded the ranking of 14 Vietnam’s commercial banks. Prior to that, the world's leading credit rating agency lifted the national credit rating from B1 to Ba3 on August 10. Moody's said that the rating improvement was gained on the basis of the strong growth potential of Vietnam’s economy, with the backing of an increasingly effective use of labor force and capital. It also said the rating upgrading reflected improvement in the banking system. Fitch Ratings in May 2018 upgraded the Long-Term Default Ratings (IRDs) and revised the Support Rating Floors of three state-invested banks, namely VietinBank, VIetcombank and Agribank, from B+ to BB-. Prior to that, the agency lifted Vietnam’s credit rating from BB- to … [Read more...] about Positive signs from Vietnam’s banks as credit ranking rises
Credit segments utilised at securities companies for margin lending will be more tightly controlled next year, while total margin loans at securities companies currently stand at a relatively low level. Credit is currently poured into the securities sector mainly through two channels – the loans that securities companies take from banks for margin lending and loans that single investors borrow directly from banks. Margin trading refers to the practice of investors borrowing money from brokerage companies to purchase securities worth more than the investors’ net asset value in their accounts. It is considered a financial leverage tool as it allows investors to buy more stock than they would be able to normally. But investors wishing to use margin trading have to deposit at brokers to form the collateral for their loans. According to statistics from the State Securities Commission (SSC), credit poured into the securities sector remains at a very low level. Credit that banks … [Read more...] about Margin loans decline on tighter credit policy