Businesses's demand for capital remained low due to large stockpiles of goods and poor consumer demand. — Photo dddn.com.vn

HA NOI (Biz Hub) ― The rate of credit growth at commercial banks remains slow, although this year has seen liquidity rising, according to Dau tu (Vietnam Investment Review) online.

Eximbank's general director Truong Van Phuoc, says that presently, many customers are not asking to borrow money, although lending interest rates have fallen to 9-10 per cent this year from 18-19 per cent in 2011.

He puts this down to many companies still having large stockpiles of goods and poor consumer demand on the market.

Beforehand, when they had capital lying idle, banks could shift their money into the inter-bank market and enjoy interest rates of 4-5 per cent per year. But now the financial incentive to do this has all but gone as the current inter-bank interest rate is only around 1.5 per cent, said Phuoc.

To attract more customers who need to borrow money, some banks have accepted that now, they have to set lending rates at lower levels than the ceiling deposit rate of 7 per cent, at 5-6 per cent, he added.

The general director of the NamA Bank, Tran Ngo Phuc Vu, said that it was extremely naive to expect a rise in credit growth in the current economic climate and that the important thing for banks to do now was to keep a tight control of risk and limit the level of bad debt.

Vu said that even though the bank had reached a credit growth of 12 per cent in the first half of the year, higher than the 9 per cent level it had predicted for the period, the value of its outstanding loans was insignificant.

The bank had asked the State Bank of Viet Nam for permission to increase its lending growth quota for this year to 30 per cent, however it would still be hard to achieve a strong growth during the rest of the year, he said.

The central bank has put in place some measures to help solve difficulties in the banking sector, including a VND30-trillion (US$1.4-billion) support package for the property market as well as making moves to raise this year's credit quotas to 20-30 per cent for some commercial banks.

But industry insiders say it will still not be easy for the nation to achieve a credit growth target of 12 per cent this year.

According to National Financial and Monetary Policy Advisory Council member Tran Du Lich, credit in the country grew by only 4.5 per cent in the first half of the year, less than half of the 2013 target of 12 per cent.

Lich said that future lending conditions will find it hard to meet the expectations of enterprises as there was very little chance of lending interest rates dropping in the near future, as operations within the banking sector remain inefficient.

Nguyen Hoang Minh, deputy director of the State Bank's HCM City branch, said commercial banks were speeding up support programmes for small and medium sized enterprises and that more businesses needed to improve transparency in order to qualify for loans.

Many firms lacked effective business plans as well as mortgageable assets and banks didn't dare lend to them, he noted. ― VNS