Lending picks up at Vietnam banks with 1.34% Q1 growth

Credit growth in the Vietnamese banking system accelerated in the final days of last month to reach 1.34% as of March 29 from end-2023.

Credit growth had rebounded and hit 0.26% as of March 25 versus end-2023, but this was still lower than the 1.99% growth in the comparable period of 2023, according to the General Statistics Office.

Credit had expanded 2.06% as of March 28, 2023 against end-2022, Dao Minh Tu, Deputy Governor of the State Bank of Vietnam (SBV) had said at a press meeting on March 31, 2023.

Tu said at a press meeting last Friday that total outstanding loans dropped in the first two months of this year due to lower credit demand after the peak season, which coincides with the year-end and the advent of the Lunar New Year season; and low capital absorption capacity of the economy as many firms scaled down or suspended operations.

Aware of this issue, the SBV implemented several measures to bolster lending, including assigning whole-year credit growth quotas to banks on December 31, 2023, giving them a freer hand, instead of doing it in tranches as was done previously.

The credit growth target has been set at 15% for this year, with greater dependence of market developments.

Tu highlighted a continued downward trend of interest rates at banks in Q1/2024. The average rate on new deposits stood at 3.02% per annum, down 0.5 percentage points from end-2023 while the average lending rate on fresh loans slid 0.6 percentage points to 6.5% per annum.

In the future, the central bank will manage interest rates in alignment with market movements, inflation and monetary policy goals, Tu said.

He said the SBV will be resolute in deploying soft loan packages, particularly for seafood and forestry companies, and encourage consumer loans. It will also cooperate with the Ministry of Public Security to tap the national database for granting consumer loans without collateral, he added.