Vietnam banking system credit expands 11% in 2023 through December 21

Vietnam’s banking system credit grew 11.09% in 2023 through December 21, up from 7.39% recorded in early November, according to the General Statistics Office (GSO).

The figure showed a significant improvement despite being much lower than the target of 14%, it said, adding capital mobilization by credit institutions increased by 10.85%.

Credit disbursement accelerated towards the year-end in the context of excess liquidity and continuously falling deposit and lending interest rates, said Nguyen Duc Lenh, deputy director of the State Bank of Vietnam's (SBV) Ho Chi Minh City branch.

He attributed the sharp credit growth in the last months of the year to increasing capital demand for production, shopping, tourism and services at the year-end, as well as before and after the Lunar New Year holiday (Tet).

At the same time, M2 money supply, a measurement of the nation's money supply that estimates all of the cash that everyone has on hand or in short-term bank deposits, also recorded a double-digit increase of 10.03% compared to the end of 2022, an impressive growth rate compared to 3.85% and 8.31% in the same periods in 2022 and 2021, respectively, according to Lenh.

“The improvements show that the government's efforts to stimulate an economic recovery have proven effective,” he noted.

In his recently released conclusion, Prime Minister Pham Minh Chinh ordered credit management be faster, more flexible and effective. Banks should firmly grasp the situations in different sectors to proactively and flexibly provide credit to the economy and serve production and business, focusing on three growth drivers: consumption, export, and investment.

It is necessary to continue promoting the fight against negative acts in the banking system, the prime minister noted, urging banks to be more flexible in lending without compromising standards.

“The State Bank of Vietnam must keep a close watch on domestic and world economic development to manage the monetary policy in a proactive, flexible, and effective manner, giving priority to promoting economic growth and ensuring the safety of banking operations and the credit institution system,” he said.

In a new report, analysts at Vietcombank Securities (VCBS) forecast credit growth of Vietnam’s banking system in 2024 at around 12%.