Vietnam central bank revises down credit growth target to 14%

The State Bank of Vietnam (SBV) on Monday adjusted down the country's 2023 credit growth target for credit institutions to about 14% from the 14-15% set at the beginning of the year.

The adjustment aims to match the operation, financial capacity, management and healthy credit expansion of credit institutions, thus ensuring the liquidity and operational safety of the whole system, in the context that Vietnam’s economic growth in the first half of the year was lower than expected, the central bank said in its announcement.

The same day, the SBV also set credit growth limits for banks to levels approaching the full-year ceiling of 14%.

The central bank said that following a resolution passed by the National Assembly and the directions of the government and Prime Minister, it has applied monetary policies "firmly, proactively, flexibly and effectively in harmony with fiscal and other macro-economic policies in order to control inflation, contributing to stabilizing the macro-economy and and supporting economic growth".

"The SBV has managed to maintain ample liquidity to provide capital for economic recovery and development." It has made four consecutive policy interest cuts, and issued circulars on rescheduling debt payment deadlines and to keep debt categories unchanged, creating conditions for customers to turn over capital and access new loans. The SBV has also directed credit institutions to streamline lending procedures.

As a result, as of June 30, the credit balance of the economy reached over VND12,400 trillion ($524.6 billion), an increase of 4.73% compared to the end of 2022, its data shows.

The SBV required credit institutions to focus on drastically implementing solutions to promote safe and effective credit growth, improve credit quality, drive credit to prioritized production and business fields and growth drivers in line with government policies, and promptly meet the capital needs of people and businesses.

They have also been asked to cut administrative procedures, simplify and shorten lending processes and procedures to create favorable conditions for customers to access bank loans, thereby helping enterprises and people to restore production and business, as well as ensuring the safety of their operations.

The central bank will continue to closely follow domestic and international market developments and stay ready to support liquidity to create conditions for institutions to provide credit to the economy. At the same time, it will review the credit growth of the whole system in the last months of the year to take appropriate management solutions.