According to experts, the need to raise charter capital stems from improving the CAR, increasing the risk provision ratio, rising medium and long-term capital sources and promoting investment in technology.
Low capitalisation levels are likely to remain a credit weakness for rated Vietnamese banks as rapid loan growth will make it challenging to raise capital adequacy ratios (CARs) in the next two to three years, according to Fitch Ratings.
State-owned and private joint stock banks have been racing to increase charter capital in the last months of this year to boost financial strength and meet the State Bank of Viet Nam (SBV)’s regulations on capital adequacy ratio.
Banks have been promoting the mobilisation of medium- and long-term capital through bond issuance to meet the State Bank of Vietnam (SBV)’s requirements on capital adequacy ratio (CAR).
Rising medium- and long-term capital demands to meet stricter regulations on credit safety limits were putting pressure on commercial banks to issue bonds in the final months of the year.
State-owned Vietcombank and Vietnam International Bank (VIB) will be granted higher credit growth rates than those of other commercial banks from the beginning of 2019, said Governor of the State Bank Le Minh Hung.
Vietnam International Bank (VIB) has received approval from the State Bank of Viet Nam (SBV) to apply capital adequacy ratio following Basel II standards.
Prosperous business performance and positive bank share price trend in the stock market are expected to help some commercial banks meet capital increase deadline required by the State Bank of Viet Nam (SBV).
State Bank of Viet Nam statistics show that the average capital adequacy ratio (CAR) of the banking sector has been consistently falling since the beginning of this year.
The Vietnam International Bank (VIB) earned VND940 billion (US$42
million) in accumulated profit before provision from January to
September, up 25.9 per cent compared to the same period last year.