HCMC – The State Bank of Vietnam (SBV) has awarded additional credit growth quotas for banks that have achieved at least 80% of their annual credit growth targets, with effect from August 28.
The central bank said that this move is intended to support those banks recording strong credit growth while ensuring financial stability.
As of August 26, credit in the banking system had expanded by 6.63% since the end of 2023, below the full-year target. Growth rates varied widely, with some banks reporting negative growth and others nearing their assigned limits.
The overall credit growth target for 2024 is set at around 15%. Unlike in previous years, the SBV has adjusted credit quotas on its own initiative, rather than waiting for banks to request increases.
In the first half of the year, credit grew by about 6% compared to late December 2023, driven mainly by lending to businesses, particularly in manufacturing, utilities, and real estate. However, retail lending remained sluggish, according to Maybank Securities Company.
Market watchers said that achieving 15% credit growth this year is still possible. However, they cautioned that aggressive credit expansion could compromise credit quality, potentially leading to economic instability, inflationary pressures, and an increase in bad debt.
Associate Professor Nguyen Huu Huan of the University of Economics HCMC emphasized the importance of prioritizing the quality of credit growth over simply meeting targets, the Vietnam News Agency reported.
Huan said that even if actual credit growth is below 15%, a robust flow of capital into productive sectors would still be beneficial. But he warned against compromising the safety of the banking system to meet growth targets, particularly given ongoing concerns about bad debt.
