Vietnam credit growth rebounds, but at a snail’s pace

Outstanding bank loans in Vietnam increased by 0.26% as of March 25 against the end of last year, marking a rebound from negative growth a month earlier, according to the government-run General Statistics Office.

Lending growth stood at 1.99% in the comparable period of 2023.

Against end-2023, lending fell 0.6% as of end-January and 0.72% as of end-February, according to central bank data.

SSI Research, under leading brokerage house Saigon Securities Inc. (SSI), estimated credit growth was negative 0.33% as of March 18.

At a national conference on monetary policy management and growth-bolstering measures held on March 14, the State Bank of Vietnam attributed the lackluster credit growth to seasonal factors after the Lunar New Year high season, and weak capital absorption capacity.

Weak lending comes at a time of massive business suspensions. Some 73,900 companies left the market in the first quarter of this year, up 22.8% year-on-year. Meanwhile, 59,900 companies started or resumed operations in the same period.

GSO data showed that deposits at banks as of March 25 had dropped 0.76% versus end-2023, compared to a 1.17% increase in the same period last year. Local banks have been cutting savings interest rates amid tepid loan growth.

Interest rates stand at 0.2% per annum for deposits of current and less-than-one-month terms, and 2.2-3.1% for terms of between one and six months. Banks are also offering rates of 6.9-7.3% per annum for deposits longer than 24 months.

Lending interest rates at commercial bank for new loans are in the range of 7.7-9.9% per annum, the office added.