Banks offer easy loans to meet year-end credit targets

The Saigon Hanoi Commercial Joint Stock Bank is offering firms that manufacture goods for export credit for up to 12 months.

It said the loan would cover the costs of raw materials and salaries.

Other lenders including the Military Commercial Joint Stock Bank (MB Bank) and the Vietnam Prosperity Joint Stock Commercial Bank (VPBank) are offering to lend 70-100 percent of renewable energy projects at interest rates of 8-10 percent for up to five years against equipment bought with the loan.

The banks’ moves come amid slowing credit growth after the pandemic caused great difficulties to many businesses and the fact that only two months are left for them to meet their credit targets for the year.

Credit growth for the year as of September 16 was 4.81 percent, the lowest in six years and far short of the 11-14 percent target set for the year, according to the State Bank of Vietnam.

Market research company Fitch Solutions has forecast credit growth to reach only 7 percent this year, down from 12-18 percent in the last three years.

"A weak economic environment does not bode well for the creditworthiness of many borrowers," it said in a report.

The SBV has cut its policy rates four times so far this year, and Fitch forecast additional cuts to deliver a further thrust to the economy whose outlook remains clouded by pandemic-related uncertainty.

Banks are scrambling to increase lending as industry insiders say credit growth of 2-3 percent a month is required to meet the targets.

A top executive of a bank based in the south, who asked not be identified, said businesses with good financial plans to recover from the impacts of the pandemic would receive loans of up to 90 percent of their costs at low interest rates.

"Banks lowered their loan interest rates in the second and third quarters in order to benefit businesses, but now they are doing so to save themselves as the end of the year is approaching."

Some banks have been able to draw close to their targets.

Nguyen Duc Thach Diem, CEO of the Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), said credit grew at 8-9 percent in the first nine months and the bank is close to achieving the remaining 4-5 percent to meet this year’s target.

Experts have tipped companies in renewable energy and exports as the top candidates for the low-interest loans thanks to the increasing demand for power and the EU-Vietnam Free Trade Agreement taking effect in August.