Seasonal factors, weak economy behind low credit growth: Vietnam central bank

Vietnam’s low credit growth in the first two months of 2024 was due to seasonal factors and weak economy, Deputy Governor of the State Bank of Vietnam (SBV) Pham Thanh Ha said on Saturday.

Normally in fourth quarters, credit growth is high thanks to vibrant lending activities. In January or February, which coincides with the Lunar New Year holiday, credit activities often decrease and lending activities are not as bustling as the last months of the year, Ha told a press conference following the government's monthly meeting.

“The world economy has not yet prospered and Vietnam’s main markets have not recovered strongly, affecting our exports,” he said, adding that the national economy still faced difficulties, leading to low credit demand.

This is despite the SBV, the country's central bank, having implemented many solutions to promote credit expansion in credit institutions. Currently, banks’ liquidity is very abundant Ha noted.

Instead of allocating a part of the credit growth quota to banks at the beginning of the year as was done previously, the central bank set an overall credit growth quota of 15%.

At the beginning of February, it issued a document directing credit institutions to focus on promoting lending growth and simplifying procedures to increase customers' capital access. It has also stepped up digital transformation to increase credit accessibility.

On February 20, the SBV organized an industry-wide conference to promote credit growth and support businesses.

According to the deputy governor, the SBV will continue reviewing documents under the newly approved Law on Credit Institutions to make appropriate amendments, thus facilitating borrowers’ capital access.

"The SBV also encourages businesses to actively offer solutions and have more feasible production and business projects. They should make everything transparent and enhance their financial capacity to gain easier access to bank credit," Ha said.

Credit growth of Vietnam’s banking system dropped 0.6% in January over end-2023, according to the SBV.

Last year’s figure of 13.71% fell short of the 14-15% target. This year, the SBV has set a credit growth target of about 15%, saying it may be adjusted to suit the actual situation.