INDUSTRIES

Mixed trends of using short-term capital for medium- and long-term loans among bank groups

As SBV regulations cap this ratio at 30 per cent, the group of joint stock commercial banks has been under great pressure to restructure their capital sources and outstanding loans to meet the SBV’s prescribed ratio.

331944 bond1 1 | FDI Việt Nam
An investor pays cash to purchase bonds at a bank in Hà Nội. For the whole year 2023, banks were the largest bond issuers with issued bonds worth more than VNĐ176 trillion, equivalent to 56.5 per cent of the total issuance value of the entire market. Photo kinhtedothi.vn

HÀ NỘI — The ratio of short-term capital for medium- and long-term loans of the entire banking system at the end of December 2023 decreased to 27.74 per cent from 28.39 per cent at the end of September, the latest data from the State Bank of Vietnam (SBV) showed.

In particular, this ratio in the group of State-owned commercial banks (Agribank, BIDV, VietinBank, Vietcombank, CBBank, GP Bank and Oceanbank) decreased from 24.31 per cent to 22.77 per cent; while in the group of joint stock commercial banks it increased from 39 per cent to 39.87 per cent.

As SBV regulations cap this ratio at 30 per cent, the group of joint stock commercial banks has been under great pressure to restructure their capital sources and outstanding loans to meet the SBV’s prescribed ratio.

According to analysts, the high ratio has pushed the group of joint stock commercial banks to promote the raising of medium- and long-term capital sources through the issuance of valuable papers, especially bonds, to reduce this ratio since last year.

Data from the Vietnam Bond Market Association (VBMA) showed up to 44 out of 55 batches of bonds issued in December 2023 belonged to commercial banks. For the whole year 2023, banks were the largest bond issuers with issued bonds worth more than VNĐ176 trillion, equivalent to 56.5 per cent of the total issuance value of the entire market.

Statistics from MB Securities Company also showed the price of bonds issued by banks in 2023 increased by 31 per cent compared to 2022, with an estimated weighted average interest rate of 6.5 per cent per year and an average term of 4.7 years. The five largest bond issuers in 2023 were all joint stock commercial banks, including Techcombank with VNĐ23.5 trillion, OCB with VNĐ22.35 trillion, LPBank with VNĐ19.64 trillion, ACB with VNĐ18.9 trillion and TPBank with more than VNĐ15.33 trillion.

SBV data also showed by the end of 2023, the ratio of outstanding loans to total deposits of the entire banking system was 76.04 per cent. Of which, the ratio in the group of State-owned commercial banks was 80.85 per cent, in joint stock commercial banks was 77.9 per cent, and in joint venture and foreign banks was 41.79 per cent.

Theo Vietnamnews