Vietnam banks turn to small sources of income amid low credit growth

TN News

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Banks have turned to small sources of income such as credit card service fees and interest rates on card payments as the demand for loans remains low, VnExpress reported.

Since August, Vietnamese banks have been encouraging credit card holders to spend more by offering discounts on credit card purchases.

Vietinbank, Vietcombank and Tienphong Bank are among the largest partly-private lenders encouraging credit card spending, while state-owned Agribank and private HSBC Vietnam have also jumped on the bandwagon.

Industry insiders said the move is a step in the right direction for banks aiming to make up for low credit growth: only 1.5 percent through the first half of this year. The low figure prompted the State Bank of Vietnam in July lower its 2012 growth rate target to 8-10 percent from a 15-17 percent estimate earlier this year.

Nguyen Hung, general director of the Hanoi-based TienPhong Bank, told VnExpress the strategy was "like accumulating small change." But he also said it was working.

The group of customers that use credit cards is small but their contribution to banks' revenue is not small, he said.

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