Vietnam credit growth reaches 9.87% as of mid-December

Vietnam’s credit as of December 13 had increased 9.87% compared to the end of last year, but was still some way off the 2023 target of 14%, reported the State Bank of Vietnam (SBV).

Of the total, credit to the agriculture-forestry-fisheries sector expanded 3.17%; industry and construction 7.31%; trade, transport and telecommunications activities 11.94%; and other service activities 5.3%.

According to the SBV's previous updates, total outstanding loans had expanded 7.39% as of October 31 to top VND12,800 trillion ($526.5 billion), 8.09% as of November 21, and 8.78% as of November 28.

At a December 7 conference on boosting credit for economic activities, Prime Minister Pham Minh Chinh attributed the low growth to the fact that people and businesses still found it hard to obtain loans due to cumbersome procedures. Although interest rates have decreased, they are still high compared to what businesses can afford.

He noted ongoing negative phenomena such as cross-ownership, especially the granting of loans at low interest rates to executives of credit institutions and their relatives.

Meanwhile, the SBV pointed out that shrinking investment, production and business, and consumption activities have led to falling demand for credit.

Some customer groups had capital needs but failed to meet loan conditions, especially small- and medium-sized enterprises (SMEs), while solutions to increase credit access through the credit guarantee funds for SMEs and development funds have not been effective.

Another reason came from the ailing real estate market, which has affected the capital absorption of property developers, while the real estate sector accounts for about 21% of total credit, the central bank said, adding after a period of economic difficulty, the risk level of customers is assessed higher as businesses are unable to prove effective operations.

Regarding solutions in the coming time, the SBV said that businesses need to improve their capacity and ability to absorb capital, actively restructure operations, improve governance, build feasible production and business plans and projects, and make their financial situations transparent, thereby increasing their credit access opportunities.

In his recently released conclusion, the Prime Minister ordered credit management be faster, 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.

“We should strengthen management based on market principles, and reduce and eventually eliminate administrative tools in operating and managing the credit institution system,” he added.