Vietnam faces capital redundancy amidst complex global situation: Agribank chairman
The international situation remains complicated in 2024, negatively impacting business activities of Vietnamese enterprises, especially banks, said chairman of wholly state-owned Agribank Pham Duc An.
Speaking at a meeting between Prime Minister Pham Minh Chinh and state-owned enterprises (SOEs) on Sunday, An said although deposit interest rates have decreased significantly, deposits continue to flow into the banking system while the need for capital has decreased as production and consumption needs shrink.
"Therefore, capital is becoming redundant at many commercial banks, increasing their interest costs," he added.

Agribank chairman Pham Duc An. Photo courtesy of the government's news portal.
Citing Agribank as an example, An said “We can lend out only VND80 out of every VND100 mobilized.” Right from the beginning of this year, the bank has proactively cut down lending interest rates and implemented a VND120 trillion ($4.86 billion) preferential credit program with interest rates 2.5-3% lower than normal to support customers, he added.
However, Agribank's income in the first two months of 2024 decreased by nearly VND1.2 trillion ($48.6 million) compared to the same period last year.
In the current context, fiscal policies, especially those related to public investment and business support, are key to stimulating production and consumption, thereby increasing the demand for capital, he said.
"The government needs to implement solutions to encourage and support businesses in green transition to meet international trends and standards," the Agribank chairman said.
Earlier, at a Saturday press conference following the government's monthly meeting, Deputy Governor of the State Bank of Vietnam (SBV) Pham Thanh Ha attributed Vietnam’s low credit growth in the first two months of 2024 to seasonal factors and a weak economy.
He explained that in fourth quarters, credit growth was typically high thanks to vibrant lending. In January or February, which usually coincide with the Lunar New Year holiday, credit activities decrease, particularly compared to the last months of the year.
“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.
The deputy governor said that 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 take on 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 credit growth of 13.71% fell short of the 14-15% target. This year, the central bank has set a credit growth target of about 15%, saying it may be adjusted later to suit the actual situation.
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