Slow credit growth in the first seven months of this year has left room for banks to start boosting lending, but bankers say it's not that easy.
While large banks no longer have enough money to lend out, smaller lenders with ample funds have used up their 20 percent credit growth limit, Thoi Bao Kinh Te Vietnam (Vietnam Economic Times) said in a report Monday.
A bank chief executive said Vietnamese banks are allowed to pump up to VND461 trillion in loans into the economy this year. They only offered loans totaling around VND165 million in the first seven months, leaving room for as much as VND300 trillion for additional credit.
But the newspaper reported that among the group of Vietnam's four major banks, which account for half of the market, three have already fallen short of funds for lending. The report did not name any of the lenders.
"It's unlikely our loans will expand by 20 percent," a banker said. "If we want to lend, we need to attract deposits first."
Since the bank chose not to break an interest rate cap on deposits to compete against other banks, it has limited funds for loans, she said.
Meanwhile, many small banks complained that they have a cash surplus, but their credit growth hit almost 20 percent.
Another unnamed chief executive said these banks should be allowed to continue offering loans because it would not affect the target of controlling Vietnam's credit growth at under 20 percent.
The government initially set a credit growth target of 23 percent, before lowering it to 20 percent in an attempt to rein in inflation. Loans rose 27.65 percent in 2010.