Eighteen banks post non-production credit at over 22pct as of late May

As of late May, there were still 18 commercial banks posting non-production outstanding loans at over 22%, notably nine of these lenders reported non-manufacturing credit at more than 30%, the State Bank of Vietnam (SBV)’s governor Nguyen Van Giau said at the press meeting on June 17.
The deadline (June 30) to bring the non-production credit growth at less than 22% of the total outstanding loans is coming, currently, commercial banks are racing to meet the central bank’s requirement and therefore the pressure for some lenders became tense.

In detail, till June 30, the non-production credit must be equal to 22% of the total outstanding loans and it will be only 16% by December 31, 2011.

Despite the difficulties in reducing non-production credit, banks are trying to respond to the central bank’s request. Currently, Hanoi-based commercial joint stock banks have revised their business plan in which the proportion of non-production outstanding loans is being adjusted accordingly.

As of June 9, the total outstanding loans to the economy of Vietnam Commercial Joint Stock Bank for Industry and Trade (VietinBank-CTG) were 256 trillion dong, growing 10.2% and now tend to fall gradually. The bank’s lending structure mainly focused on production, export, agriculture and rural areas. Of which, the bank’s loan for rice purchase for stockpile was over 50 trillion dong, or 19% of its total outstanding loans, Le Duc Tho, VietinBank’s deputy general director said.

Notably, VietinBank strictly complies with the central bank’s provisions on non-production loans. Till date, the bank’s non-production loans account for only 10.1% of its total outstanding loans, including 0.01% for securities, 4% for consumer loans and 6.1% for real estate sector.

According to chairman of OceanBank’s director board, Ha Van Tham, from early this year so far, the bank mainly focused on restructuring its assets, so its outstanding loans saw a little change. At the same time, the bank’s non-production credit now accounts for about 23% of its total outstanding loans and it will be likely to be 22% by the end of this month.

Even, Vietnam Technological Commercial Joint Stock Bank (Techcombank) and Military Commercial Joint Stock Bank (MB) reduced their non-production credit to below 22%.

However, it is not easy for all banks to realize the target of bringing non-production credit to 22% as prescribed by the central bank.

At the press meeting on June 17, SBV’s governor confirmed the central bank will not delay the deadline of applying non-production credit at 22% on total outstanding loans by the end of June.

Giau also said the central bank will strictly deal with the violations.

The governor also agreed that some banks are facing difficulties in reducing non-production credit caused by loans for real estate, securities and consumer.

However, the governor said commercial banks were given enough time to lower the non-production credit by the end of June because the regulation had been issued by early March already. – Vietbiz24

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial