Vietnam's credit growth to hit 19% in 2025, highest in many years: central bank

Vietnam’s credit growth has reached one of its highest levels in years, pushing the country’s credit-to-GDP ratio to the highest among lower-middle-income economies, according to the central bank.

At a press briefing on Monday, State Bank of Vietnam (SBV) Deputy Governor Pham Thanh Ha said outstanding credit across the banking system had risen 17.87% by December 24 compared to the beginning of the year, reaching VND18,400 trillion ($700 billion).

Credit flows have been directed mainly toward production and business activities, particularly priority sectors and key growth drivers in line with government policy, he added.

For the full year, credit expansion could reach about 19%, the highest level in many years, Pham Chi Quang, head of the SBV’s monetary policy department, told the press briefing.

“This is a very high growth rate. The SBV has repeatedly reported this to higher authorities,” Quang said, adding that Vietnam’s credit-to-GDP ratio has climbed to 146%, the highest among lower-middle-income countries.

In 2024, the credit growth was 15.08 %, government data shows.

Quang noted that banks face structural risks, as around 80% of their funding is short-term while about half of lending is medium- to long-term, creating a persistent mismatch and posing major challenges for risk management.

Credit growth of nearly 18% has also outpaced deposit growth of around 14%, putting pressure on system liquidity, especially ahead of the Lunar New Year when seasonal demand for funds typically rises. Banks are also facing intense competition from other investment channels, making it harder to mobilize deposits to meet credit demand, he said.

In response, the central bank has deployed a range of monetary policy tools, including open market operations (OMO) and a new foreign-exchange swap mechanism, to ensure system liquidity, he added.

The National Assembly, Vietnam's legislature, on November 12 approved a resolution setting an economic expansion target of at least 10% for 2026 and inflation controlled at around 4.5%.

The government aims to enlarge the national economy by 8.3-8.5% for 2025. GDP grew 7.85% in the first nine months. The figure was the second-highest levels in 11 years, except for 2023 which saw a strong surge post the pandemic.

Driving forces of the high economic growth are export, FDI inflows, public investment expansion, and domestic consumption.

The National Financial and Monetary Policy Advisory Council has recommended that the Government refrain from expanding monetary policy in 2026, adopt a more cautious approach, and coordinate monetary and fiscal policies in a balanced manner.

The recommendation came as experts warned that 2026 would remain challenging, with significant capital pressures and risks related to interest rates, bad debts, exchange rates, and corporate bonds, Deputy Prime Minister Ho Duc Phoc, chairman of the council, said at a meeting last Friday.

At the same briefing on Monday, Dao Xuan Tuan, head of the SBV's foreign exchange management department, provided an update on licensing for gold bar production. Under current regulations, the central bank reviews and grants licences before December 15 each year.

So far, it has received nine applications from eligible commercial banks and enterprises seeking licences to produce gold bars. The central bank is coordinating with relevant ministries and agencies to conduct assessments, Tuan said.

“The process is being carried out cautiously to ensure compliance with regulations. Enterprises and banks themselves are also proceeding carefully when approaching the market, including weighing options for import permits,” he said.

On plans to establish a gold trading exchange, Tuan said proposals have been submitted to the Government.

In a report released on December 22, Singaporean bank UOB noted that Vietnam’s inflation rate has yet to show a meaningful slowdown. Year-to-date headline inflation rate hit 3.3% in Octover, vs average of 3.6% in 2024 and 3.26% in 2023.

Main drivers continue to be costs of housing & construction materials (6.2% year-on-year average year to date; 18.8% weight) and health care (17% year-on-year average year to date; 5.4% weight).

Combined with the potential for decent growth prospects going into 2026 and persistent VND weakness, these factors would constrain the SBV’s ability to ease policy. As such, UOB analysts expect the central bank to keep its refinancing rate steady at 4.5%.