Vietnam targets 15% credit growth this year

The State Bank of Vietnam (SBV), the country’s central bank, has set a credit growth target of 15% for this year, significantly higher than the estimated 12% expansion in 2023.

The credit quotas for different banks will be adjusted in line with actual developments, the central bank said in a dispatch last Sunday.

It said that the move aimed to ensure timely provision of sufficient loans to serve the needs of businesses and people, contributing to economic growth and stabilizing the macroeconomy.

The credit growth ceiling assigned for each credit institution takes into account their ratings and outstanding loans as of December 31, 2023, it added.

The SBV requires credit institutions to provide loans in a safe manner and in line with their risk management capacity, liquidity and ability to mobilize capital, while preventing bad debt from rising.

The credit institutions are also banned from providing preferential interest rate loans to executives and their relatives; as also businesses within their ecosystem and “backyard” companies.

The SBV said that it will closely monitor actual developments to manage credit growth in a proactive, flexible, prompt and effective manner. It will also adjust the credit growth target and proactively revise credit growth quotas given to each credit institution without their request.

Total outstanding loans in Vietnam’s banking system had expanded 11.09% in 2023 through December 21, still far below the SBV’s full-year target of 14.5%, according to the General Statistics Office.

Researchers at Hanoi-based Vietcombank Securities have predicted a 12% credit growth in 2023 on the back of weak demand for loans as economic recovery remained slow and the real estate market remained gloomy.

Vietnam aims to grow its economy by 6-6.5% this year, up from 5.05% in 2023.