BANKS REPORT STRONG GROWTH IN LENDING AND BORROWING

[18-10-2016] Banks in HCMC reported high growth in lending and borrowing in the first nine months of the year, according to the HCMC branch of the State Bank of Vietnam (SBV). Deposits at banks amounted to more than VND1,740,000 billion, up 11.37% against the same period last year, whilst outstanding loans reached VND1,390,000 billion, a year-on-year increase of 13.26%. These are the highest January-September growth rates in recent years.

While deposits picked up 11% in 2015, 6.74% in 2014 and 7.33% in 2013, loans grew 8.37%, 6.02% and 4.53%, respectively. This positive change is attributed to further economic growth in the city and the country as a whole, and improving business conditions.

The commodity, stock and real estate markets have changed for the better. The current monetary policy is conductive to business operations. Interest rates are mostly quoted at 6.75-9.04% per year for short-term loans, and 8.7-9.9% for longer tenors.

A report of the central bank branch in the city says the exchange rate between the Vietnam dong and the U.S. dollar will remain stable since the U.S. Federal Reserve has shown little sign of raising interest rates in the short term.

Regarding bad debt in the HCMC banking system, as of August 31, bad debt had accounted for 3.8% of total outstanding loans, a slight fall from 3.92% in late 2015.

In January-August, over VND35 trillion in bad debt was settled, with more than VND16.3 trillion in cash, VND4.3 trillion sourced from the risk provision fund, VND223 billion from sales of mortgaged assets, VND9.6 trillion sold to VAMC, and over VND4.5 trillion settled by other measures.

Compared to previous years, bad debt fell in the first nine months of this year as credit institutions stabilized operations, cut losses and regained growth and profitability, according to the SBV’s HCMC branch,

In addition, the market recovered, leading the settlement of bad debt in cash to surge to over VND16.3 trillion, or 47% of all the settled bad debt, the highest rate in three years.

However, the branch said settling bad debt remains a daunting task because bad debts related to lawsuits makes up a staggering 48.8% of the total but a majority of them remain unsettled.

Auctioning mortgaged assets through courts is time-consuming.

Source: The Saigon Times