Banks see credit growth limit extended

By Huong Dung
Wed, September 7, 2022 | 10:09 pm GMT+7

Some commercial banks have seen their credit growth cap lifted for this year, the State Bank of Vietnam announced Wednesday.

The adjustments are in the range of only 1-4%, depending on each facility, as the central bank (SBV) still exercised caution over inflation risk concerns.

At the beginning of the year, the SBV had set the ceiling level for each bank to keep the limit for the banking system at 14%.

The “Big 4” - Vietcombank, BIDV, Agribank, and Vietinbank, are among the names enjoying a credit room extension this time.

Vietcombank had its credit limit extended from 15% to 17.2%. By the end of August, Vietcombank’s credit had grown 14.7% compared to the beginning of the year. Therefore, the bank can lend a maximum of about VND32 trillion ($1.35 billion) in the remaining four months.

Agribank is mong Vietnamese banks with the largest loan balance. Photo courtesy of VnEconomy newspaper.

Agribank is mong Vietnamese banks with the largest loan balance. Photo courtesy of VnEconomy newspaper.

The credit growth cap for Agribank, a wholly state-owned bank, has been lifted to 10.5% from 7%. Among banks with the largest loan balance, this bank will have about VND50 trillion ($2.2 billion) to lend from now until the end of the year.

The remaining two state-owned banks, BIDV and Vietinbank, are also allowed to widen their credit room, but at a more modest level. The credit limit extension of around 3% is quite common among small-scale private banks.

In early August, SBV Governor Nguyen Thi Hong had stated that the central would stick to its 14% credit growth cap for this year over inflation risk concerns.

She told a government meeting that quite a few banks and businesses wanted to have the ceiling on credit growth raised, but 14% was already higher than last year and the central bank had already factored in the economic recovery stimulus when determining the 14% cap.

"Vietnam’s ratio of credit to GDP is up to 124%, the highest in the world. The ratio of credit to deposit is already 99%. If the credit growth cap is raised, there is a risk of an interest rate race like in 2010-2011. In order to stabilize the exchange rate, the State Bank must stabilize credit," she said.

By the end of August, credit growth reached 9.91% - much higher than the same period of the two previous years. Many banks had recently hit the ceiling of credit growth granted since the beginning of the year, making it difficult for people and businesses to access loans.

Although the credit demand of the economy is very high after the pandemic, the central bank is cautious when setting credit limits to control inflation and stabilize exchange rates amid global economic uncertainties.

The SBV put the country's inflation target at 4% for this year. In the January-August period, on average, Vietnam's consumer price index climbed up 2.58% year-on-year.

In late July, the Ho Chi Minh City Real Estate Association had proposed that the central bank raise its credit growth cap for the year to 15-16% from the current 14%.

The association (HoREA) specifically suggested the SBV lift the credit ceiling for the “Big 4” banks, namely BIDV, Agribank, VietinBank, and Vietcombank, as well other commercial banks meeting Basel II standards.

There are concerns among developers and traders that banking credit to real estate has been narrowed down, while the corporate bond market tightened up following the cancellation of Tan Hoang Minh's nine bond issuances in early April due to its provision of "untrue information".

Comments (0)
  • Read More
Northern Vietnam city receives $15.6 bln in pledged investment capital post-merger

Northern Vietnam city receives $15.6 bln in pledged investment capital post-merger

Over $15.6 billion in investment capital was committed for the northern port city of Hai Phong on Tuesday, a record high.

Industries - Tue, July 15, 2025 | 11:12 pm GMT+7

Honda cements Vietnam motorbike market dominance with 10% sales growth

Honda cements Vietnam motorbike market dominance with 10% sales growth

Honda Vietnam (HVN) reported a 10% year-on-year increase in motorcycle sales to nearly 2.3 million units in fiscal year 2025, which ended on March 31, according to the company’s annual report.

Companies - Tue, July 15, 2025 | 5:42 pm GMT+7

Foreign investors net buy over $497 mln on Vietnam's stock market from July 1-15

Foreign investors net buy over $497 mln on Vietnam's stock market from July 1-15

VN-Index, which represents the Ho Chi Minh Stock Exchange, dropped by 9.77 points to 1,460.8 on Tuesday, ending its seven-session gaining streak.

Finance - Tue, July 15, 2025 | 5:13 pm GMT+7

UPS eyes opportunities in Vietnam's free trade zone, airport projects

UPS eyes opportunities in Vietnam's free trade zone, airport projects

Leading global shipping and logistics firm UPS is eyeing business opportunities at the Danang city-based free trade zone and the Long Thanh International Airport in Dong Nai province.

Economy - Tue, July 15, 2025 | 3:58 pm GMT+7

Vietnam PM asks Marubeni to expand investment in gas-fired, offshore wind power

Vietnam PM asks Marubeni to expand investment in gas-fired, offshore wind power

Marubeni should expand its activities in Vietnam in the fields of gas-fired and offshore wind power, export of electricity to ASEAN countries, and development of AI and big data, said Prime Minister Pham Minh Chinh.

Economy - Tue, July 15, 2025 | 12:21 pm GMT+7

Vietnam’s wood pellet industry needs production standardization to meet global demand: experts

Vietnam’s wood pellet industry needs production standardization to meet global demand: experts

Businesses should invest in developing dedicated raw material zones to reduce the Vietnamese wood pellet industry’s reliance on secondary supply sources and ensure compliance with legality and sustainability standards, said an expert.

Economy - Tue, July 15, 2025 | 9:18 am GMT+7

Riding out tariff turbulence, investment funds in Vietnam report strong growth gains

Riding out tariff turbulence, investment funds in Vietnam report strong growth gains

Many equity funds in Vietnam have posted strong growth returns, with gains exceeding 30% since the market’s April 10 trough in 2025, data collected by The Investor shows.

Finance - Tue, July 15, 2025 | 9:00 am GMT+7

Singapore supports businesses, workers amid US tariff pressures

Singapore supports businesses, workers amid US tariff pressures

The Singapore Economic Resilience Taskforce (SERT) has announced measures to help Singapore companies adapt to a new U.S. tariff.

Southeast Asia - Mon, July 14, 2025 | 10:11 pm GMT+7

Malaysia makes efforts to minimize US tariff’s impacts

Malaysia makes efforts to minimize US tariff’s impacts

Malaysia’s top export to the U.S. - electronics and electrical products - will face the biggest brunt of a 25% tariff hike that the U.S. has imposed on the country, said head of School of Business under the Monash University Malaysia Prof Nafis Alam.

Southeast Asia - Mon, July 14, 2025 | 10:08 pm GMT+7

Thailand faces $6.14 bln export loss if US tariff is 25-36%: forecast

Thailand faces $6.14 bln export loss if US tariff is 25-36%: forecast

Thailand could lose up to THB200 billion ($6.14 billion) in export value this year if the U.S. imposes new tariffs ranging from 25-36% on Thai goods, according to a forecast from the University of the Thai Chamber of Commerce (UTCC).

Southeast Asia - Mon, July 14, 2025 | 10:06 pm GMT+7

Southern Vietnam province Tay Ninh okays many high-tech agri projects

Southern Vietnam province Tay Ninh okays many high-tech agri projects

Tay Ninh authorities recently granted in-principle approvals to a string of high-tech agricultural projects, paving the way for significant development opportunities in the southern province.

Industries - Mon, July 14, 2025 | 10:00 pm GMT+7

Construction ministry backs $1.95 bln port project in southern Vietnam

Construction ministry backs $1.95 bln port project in southern Vietnam

Geleximco Group's Cai Mep Ha container and general port project aligns with the national master plan and the master plan for Vietnam’s seaport system, according to the Ministry of Construction.

Infrastructure - Mon, July 14, 2025 | 5:09 pm GMT+7

Electric vehicles in Vietnam: 7 years of development and double-digit growth prospect

Electric vehicles in Vietnam: 7 years of development and double-digit growth prospect

The shift toward greener mobility has been underway in Vietnam and the local electric vehicle (EV) market is expected to see double-digit growth thanks to favorable policies, infrastructure development, automakers’ efforts, and a young consumer base.

Economy - Mon, July 14, 2025 | 4:46 pm GMT+7

HCMC apartment prices continue to rise as supply hits 10-year low in H1

HCMC apartment prices continue to rise as supply hits 10-year low in H1

The apartment market in former Ho Chi Minh City continued to see rising prices since the total supply in the first six months of 2025 hit the lowest since 2015, according to real estate consultancy firm DKRA.

Real Estate - Mon, July 14, 2025 | 4:03 pm GMT+7

Buyer secures Sunshine Group’s Hanoi shophouse at 15% lower than market price via livestream

Buyer secures Sunshine Group’s Hanoi shophouse at 15% lower than market price via livestream

A buyer successfully secured a shophouse at property major Sunshine Group’s Noble Palace Tay Thang Long project in Hanoi for VND11 billion ($421,295), VND2.5 billion or 15% below market value, during a bidding livestream on the NobleGo platform held last Friday evening.

Companies - Mon, July 14, 2025 | 1:37 pm GMT+7

Vietnam’s major rice exporter Vinafood 1 tasked with developing mega agri-logistics hub

Vietnam’s major rice exporter Vinafood 1 tasked with developing mega agri-logistics hub

Vinafood 1, Vietnam's top rice exporter, has been asked to develop an integrated hub for agricultural trade, logistics, warehousing, exports, customs, banking, irradiation, and research and development activities.

Industries - Mon, July 14, 2025 | 12:19 pm GMT+7