Credit growth remains far from government target

Credit growth within Vietnam's banking system at the end of May 2024 had increased by only 2.41% against the end of 2023, far below the targets set for this year, the government reported.

The government has set a credit growth target of 5% for the first six months of 2024 and 15% for the whole year.

Credit growth at banks in Ho Chi Minh City and Hanoi at the end of May 2024 was double that of the average rate elsewhere in Vietnam.

According to newly released data from the Hanoi Statistics Department, total outstanding loans in the capital city by the end of May had reached VND3.8 quadrillion ($149.3 billion), an increase of 1.14% compared to the previous month and 5.09% compared to the end of 2023.

Of the total, short-term outstanding loans were VND1.6 quadrillion, an increase of 6.61% compared to the end of last year, and medium- and long-term outstanding loans had reached more than VND2.19 quadrillion, an increase of 4.01%.

According to the Hanoi Statistics Department, credit institutions in the capital have promoted credit growth by offering preferential credit programmes and packages and applying flexible interest rate policies.

The average lending interest rate is 7.5-9.7% per year, while the maximum short-term loan interest rate for priority sectors, including agriculture, rural areas, exports and SMEs, is about 3.6% per year.

Meanwhile, the HCMC Statistics Department reported the total outstanding loans at credit institutions in the city as of May 31 was estimated at VND3.61 quadrillion ($141.83 billion), an increase of 4.5% compared to the end of 2023.

Of which, short-term outstanding loans were at nearly VND1.72 quadrillion, up 6.1% compared to the end of last year, and medium- and long-term outstanding loans were more than VND1.89 quadrillion, up 3.1% compared to the beginning of the year.

Similar to the general trend of the whole country, capital mobilisation at credit institutions in the two cities had decreased compared to the beginning of the year.

Banks in Hanoi had raised nearly VND5.32 quadrillion by the end of May 2024, an increase of 0.15% compared to the previous month but a decrease of 0.38% compared to the end of 2023. Of the total, deposits ahd reached VND4.67 quadrillion and issuance of valuable papers stood at VND641 trillion.

Deposit interest rates offered by Hanoi-based banks at the end of May increased slightly compared to February and March, reaching 0.1-0.5% per year for non-term deposits, 1.8-3.3% per year for 1-6 month deposits, 3-5.2% per year for 6-12 month deposits and 4.1-5.7% per year for deposits above 12 months.

In HCMC, by the end of May, the total mobilised capital of credit institutions was estimated at more than VND3.52 quadrillion, up 0.2% compared to the previous month but down 1.2% compared to the beginning of the year.