Vietnam seeks to enhance credit growth as H1 tally falls short at 3.36%

Vietnam needs to lift credit growth in the second half of this year after the first half’s growth fell below expectations, State Bank of Vietnam Deputy Governor Dao Minh Tu said on Wednesday.

As of June 15, the country’s credit growth was up 3.36% against the end of last year, Tu told a six-month review meeting in Hanoi.

The main reasons were weak credit demand and a decline in corporate financial capacities, while commercial banks have been unable to lower lending criteria, he said, adding that these were ongoing problems.

The central bank's deputy governor stressed that commercial banks have sufficient credit supplies but demand is weak in line with the slowing economy. There are also enterprises in need of bank loans but fail to meet lending criteria.

For the whole year, the State Bank (SBV) expects credit growth to reach 14-15%. Therefore, the second half is expected to see much higher growth than the first half, which provided around VND12,320 trillion ($524 billion), up 8.94% year-on-year.

Last week, the SBV issued its fourth interest rate cut this year to support growth in Vietnam’s export-driven economy amid prolonged global economic headwinds.

The World Bank cut its Vietnam’s GDP growth forecast this year to 6% in its June edition of “Global Economic Prospects,” but the figure remains among the highest in Asia, on par with the Philippines. In January, the bank had estimated Vietnam’s 2023 GDP growth at 6.3%.