Lend more, promote growth, Vietnam central bank tells commercial banks

By Minh Hue
Fri, February 9, 2024 | 3:40 pm GMT+7

The State Bank of Vietnam (SBV) has asked commercial banks to take measures to boost credit growth in the first months of 2024 and contribute to promoting economic growth.

The State Bank of Vietnam has set a 15% credit growth target for 2024. Photo by The Investor/Trong Hieu.

The State Bank of Vietnam has set a 15% credit growth target for 2024. Photo by The Investor/Trong Hieu.

In a dispatch sent to credit institutions and foreign bank branches, the SBV said it has set a 2024 credit growth target of about 15% for credit institutions. However, credit growth at the beginning of this year has been quite low compared to recent years, it noted.

Therefore, commercial banks should deploy appropriate credit growth solutions to meet the economy's capital needs. “Banks must direct credit to production and business, priority areas and growth drivers, and control loans to potentially risky fields, ensuring safe and effective operations,” the dispatch said.

Procedures and processes should be simplified, creating favorable conditions for people and businesses to access capital.

Credit growth was a bottleneck for the banking industry in 2022 and 2023, the central bank points out. In the second half of 2022, while market liquidity was scarce and loan demand surged, banks did not have enough credit room. In 2023, banks had excess capital but businesses had low credit appetite. Controls had been placed on sectors with high capital needs like real estate.

This year, the regulator has set a credit growth target based on the actual situation and proactively adjusted lending limits for each bank, without requiring them to submit requests for additional room as was one in previous years, the SBV said.

This change came about after Prime Minister Pham Minh Chinh repeatedly called for pumping capital into the economy.

At the end of November 2023, the Prime Minister asked the SBV to learn lessons from the events of 2022, stressing the need for timely and effective credit growth management to ensure adequate capital supply for the economy while ensuring banking system safety.

Credit growth hit 13.5% last year, slightly lower than the target of 14.5%, but this can be seen as a positive development in the context of economic hardships, the SBV said. Around VND1,300 trillion ($53.31 billion) was injected into the economy last year.

Credit institutions in Vietnam are expected to pump around VND2,000 trillion ($82 billion) into the economy this year, or a 15% credit expansion, the SBV note said.

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