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Banking & Finance

BIDV puts 2015 credit growth at 17%

Released at: 17:12, 05/10/2015

BIDV puts 2015 credit growth at 17%

Bank releases report on credit in first nine months of the year and closing three months.

by Nguyen Hoai_ Hoai An

In its report on the macroeconomic situation in the first nine months of the year and forecasts for the remaining three months and certain proposals, the Research Group of the Bank for Investment and Development of Vietnam expects that credit growth will reach 17 per cent this year.

As at September 21 credit growth stood at 10.78 per cent, double the figure in the same period of last year. Most capital went to the manufacturing and trade sectors, especially in five areas prioritized by the government.

However, according to the National Financial Supervisory Commission, in the first nine months, despite the significant increase in credit and the slight growth in net interest margin (NIM), risk provisions also rose so the profitability of commercial banks fell.

Chairman of the Management Board of the Vietnam Assets Management Company (VAMC), Mr. Nguyen Quoc Hung, said that in order to bring bad debts in the banking system down to 3 per cent by September 30, the company had to sell a principle balance of VND77 trillion ($3.4 billion) through issuing special bonds worth VND67.8 trillion ($3.1 billion) before August 31.

When banks hold special bonds they must have risk provisions for the bonds and for loans, which are not sold to VAMC. As a result, the provision has reduced the profitability of commercial banks. The government also encourages interest rates cuts, which also results in lower profits. Meanwhile, over the last four years support for social security and poverty reduction has also seen falling return-on-equity (ROE) ratios.

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