Vietnam poised to achieve 15% credit growth target: central bank

Vietnam is on track to meet its 2024 credit growth target of 15%, with credit expansion reaching 12.5% as of Saturday, according to Dao Minh Tu, State Bank of Vietnam (SBV) Deputy Governor.

This marks a significant improvement from the same period last year, when credit growth stood at just 9%, Tu stated at a regular cabinet press briefing on the same day.

As of now, total credit outstanding in Vietnam’s economy has reached approximately VND15.3 trillion (around $602.7 billion), while deposits stand at VND14.8 trillion.

The growth rate of deposits has lagged behind that of credit, signaling strong demand for borrowing.

"As is customary, the end of the year is a period of high disbursements, so we are confident that this target will be met," Tu remarked.

The Deputy Governor attributed the robust credit expansion to the strong export growth, recovery of business operations, and a generally favorable investment environment.

He also highlighted the government's coordinated efforts across macroeconomic, financial, and monetary policies, which have created a stable and supportive business environment. These measures have enhanced the economy's capacity to absorb capital, encouraging businesses to borrow more.

A major shift in the banking sector this year has also played a role in supporting credit expansion. For the first time, banks have been given the flexibility to set their own credit limits based on real-time economic conditions and their internal capabilities.

Banks that reached their initial credit limits earlier in the year are now able to increase their lending capacity proactively, without waiting for the SBV's approval, a process that was previously required.

In addition to these changes, average lending rates have dropped by 0.96 percentage points since the beginning of the year, helping businesses reduce input costs and invest more aggressively.

The SBV has also streamlined several regulations, including the introduction of debt restructuring mechanisms in the wake of super typhoon Yagi in September, which have further aided business recovery.

While the SBV continues to monitor credit risks in sensitive sectors like real estate and securities, authorities have found ways to support these industries, which are showing signs of recovery.

A boost for economic growth in 2024 and beyond

The strong credit growth is expected to play a key role in boosting economic growth in 2024.

According to Tran Quoc Phuong, Deputy Minister of Planning and Investment, Vietnam is well-positioned to meet its target of 7% economic growth this year. “Barring major disruptions such as natural disasters and external shocks, we are confident in achieving this growth,” Phuong said.

Looking ahead, the National Assembly has set a GDP growth target of 6.5-7% for 2025. However, the Prime Minister asked for efforts to push for an 8% growth target in 2025, with an aim of laying the groundwork for a period of double-digit growth between 2026 and 2030.

Phuong emphasized that this ambitious target is part of a broader long-term strategy to transform Vietnam into a high-income, developed nation by 2045.

He is optimistic that the 8% growth target is achievable, bolstered by the positive momentum from 2024. Phuong also pointed to significant institutional reforms, including a series of new laws passed by the National Assembly in its recent session.

These laws, set to take effect in early 2025, are expected to unleash previously bottlenecked resources, which could accelerate economic growth.