When borrowers are... "hunted"

Many banks are frantically trying to find ways to approach borrowers. It seems that borrowers are truly kings when banks go to the market and home to solicit.

The reason is that half of 2014 has passed, but the credit growth rate of banks is at a... "turtle" level.

Knock on the door to invite God

In the context of sluggish credit growth, speaking with reporters, many bank leaders said they are having headaches with the problem of “stockpiled” money. Many banks have had to launch special credit packages to redirect credit flows and stimulate borrowing needs of people and businesses.

Many banks have even had to move into the retail sector, hunting for individual customers. The sight of bank employees knocking on doors to solicit loans is no longer rare in big cities.

Among these, SeABank has a preferential short-term credit package for import-export enterprises. The implementation period lasts until September 30, the credit package is 300 billion VND and 20 million USD. The preferential interest rate is only from 6.5%/year for loans in VND and 4%/year for loans in USD.

Aiming at a specific customer segment, Techcombank chose to enter... the market. The bank lends 100% of capital needs to small traders in markets and surrounding areas in Hanoi, Ho Chi Minh City, and Bac Ninh, with a limit of up to 3 billion VND.

The bank also launched a strategy targeting individual customers doing business in industries that do not require business registration nationwide; as well as lending to households engaged in agricultural, forestry, fishery and salt production.

The tactic of approaching people in need of loans through introductions from neighborhood leaders or door-to-door solicitation has also been thoroughly applied by some banks in Ho Chi Minh City and Hanoi recently.

MHB Bank implements a policy of sending employees to each house in Thanh Xuan residential area - Hanoi to market loans. Transaction office employees of Viet A Bank, Dong A Bank ... also continuously make marketing calls or go to houses to offer low-interest consumer loans.

Credit growth pressure also weighs heavily on the "big guys" of the banking industry. According to Mr. Ong Dao Hao, Deputy General Director of Vietcombank, in the first 5 months of the year, the bank's credit growth was quite low (3.16% while the plan was 5%). Compared to the plan of 13% (for the whole of 2014), this is a huge pressure for the bank's leaders in the last months of the year.

The underground race is full of risks

Representatives of some banks admitted that they were sitting on hot coals, despite implementing many credit promotion strategies. An underground race to increase credit growth among banks is taking place with many potential risks. Many banks accept to “cut losses” by offering lending programs with interest rates lower than the mobilization level.

The head of a transaction office of a medium-sized bank on Vo Van Dung Street (Dong Da District, Hanoi) admitted: Businesses face one difficulty, banks face twice as much difficulty. According to the allocated target, each month the transaction office must apply for consumer loan sales of 500 million VND/employee. At the same time, it must find a customer to lend for car purchase or real estate purchase.

“The pressure is huge. If a credit officer fails to meet his/her target for six consecutive months, his/her bonus will be cut and his/her contract will be terminated. The bank is also under pressure to find profits to pay interest to depositors and operating costs. To compete with other banks, the loans we have approved for customers recently have extremely low fees. Some loans are even exempted from some fees,” he said.

Although the credit growth rate is low, the leaders of the State Bank of Vietnam (SBV) still affirm that they will continue to persistently pursue the target of 12-14% for the whole year of 2014. Ms. Nguyen Thi Hong, Director of the Monetary Policy Department (SBV) said: The pressure to disburse capital is weighing heavily on banks. Many businesses have been able to borrow at interest rates of only 5% - 6%/year. Some units even enjoy interest rates of only 4.8%/year.

According to reading the newspaper