Vietnam loans down, money supply up at end-April
Money supply at the end of April rose 3.14 percent from the end of 2011
The Southeast Asian country’s economy slowed to a 4 percent growth in the first quarter, the lowest in three years. Businesses had high inventory and were reluctant to borrow while lending rates were high, leading to a negative credit growth.
Money supply at the end of April, excluding the value of the debt bought by banks, rose 3.14 percent from the end of 2011 to VND3,036 trillion, State Bank of Vietnam data showed.
Deposits by residents rose 11.78 percent during the period to VND1,449 trillion, while deposits by banks dropped 5.6 percent to VND1,084 trillion, the data showed.
It was the first time Vietnam’s central bank has published the value of outstanding loans, deposits and money supply generated in the banking system.
Bankers say they would rather have negative lending growth than bad debt.
The inventory index, a measure of unsold goods held in warehouses, rose 34.9 percent as of March 1 from the same period last year, government’s statistics showed.
Vietnam’s economic growth is forecast to slow to an annual pace of 4.31 percent in the first half of this year, even though second-quarter growth accelerated to an estimated 4.5 percent.
In late May, the government shifted its priorities to stimulating expansion and Prime Minister Nguyen Tan Dung told banks with surplus funds to boost lending, after the inflation rate fell to below 10 percent for the first time since October 2010.
The State Bank of Vietnam said last year it would publish statistics of the banking system’s operations, in addition to policy news and details of bank mergers and acquisitions, in a move to bring more transparency to the sector.
It also plans to disclose five of the 12 core banking system indicators, in line with the International Monetary Fund’s financial soundness indicators, including capital adequacy ratio, return on assets (ROA), return on equity (ROE), bad debt and breakdowns of bank loans.
On Wednesday the central bank said banks had weaker financial performance last year than the year before and their bad debts recently have been “rising continuously”.
Bad debts in Vietnam hit $5.18 billion, or 4.14 percent of total loans as of April, up from 3.06 percent in 2011, due to economic difficulties faced by businesses, based on a central bank report to the National Assembly reported by state media.