The ratio of short-term capital for medium and long-term loans has decreased to 30% from October 1. How will it affect banks?

09/25/2023 07:12 Nhat Linh Print article

ANTD.VN - According to the roadmap stipulated in Circular 08/2020/TT-NHNN, on October 1, 2023, banks will have to reduce the maximum ratio of short-term capital for medium and long-term loans to 30% instead of 34% as at present.

Although there is a proposal from businesses and the Real Estate Business Association to postpone the deadline for tightening the ratio of short-term capital for medium and long-term loans.

The Ho Chi Minh City Real Estate Association (HoREA) proposed that the State Bank extend the application of this ratio by 12 months, meaning that the deadline for tightening the use of short-term capital for medium and long-term loans to 30% will be postponed to October 1, 2024.

However, up to this point, with only about a week left before the above regulation takes effect, the State Bank still maintains this regulation.

Tỷ lệ vốn ngắn hạn cho vay trung dài hạn tại các ngân hàng sẽ giảm xuống mức 30% từ 1/10/2023 ảnh 1

The ratio of short-term capital for medium and long-term loans at banks will decrease to 30% from October 1, 2023.

According to the State Bank, up to 88% of banks' mobilized capital is deposits under 12 months, but 52% of the system's outstanding credit is medium and long-term.

Therefore, in order to improve credit activities and ensure liquidity for the banking system, the application of Circular 08/2020/TT-NHNN is expected to help banks in Vietnam better control liquidity risks, stabilize operations in the face of domestic and foreign changes, and promote sustainable economic development.

According to KB Securities Vietnam (KBSV), as of July 2023, most banks have met the maximum ratio of short-term capital used for medium and long-term lending of 34% (applied from October 1, 2022 to September 30, 2023).

Accordingly, this ratio remains at 32.66% for the group of joint-stock commercial banks, higher than the group of state-owned commercial banks (24.97%). Considering the whole system, the ratio of short-term capital for medium- and long-term loans is 26.14%.

Previously, KBSV statistics showed that at the end of 2022, except for Oceanbank (rate of 32%), most banks also had a short-term capital ratio for medium and long-term loans below 30%, meeting the requirements of Circular 08 which will be applied in early October 2023.

Specifically, the ratio of short-term capital for medium and long-term loans at Techcombank reached 29%, Agribank was 25%, VietinBank was 26% and BIDV reached 22%. Other banks such as Vietcombank, HDBank (ratio reached 8%) are in the group of few banks with ratios below 10% and are almost unaffected by the new roadmap.

Assessing the impact of Circular 08, KBSV experts said that in the short term, lowering the ratio of short-term capital for medium and long-term loans will slow down the process of reducing interest rates for long-term loans in the context of the economy needing support. At the same time, Circular 08 will also partly put pressure on banks' demand for long-term mobilization, increasing capital costs, and causing pressure to narrow net interest margins (NIM).

However, in the long term, the application of new regulations is expected to help banks better control liquidity risks, stabilize operations in the face of domestic and foreign changes, and promote sustainable economic development.

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