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Saturday, June 22, 2024

Credit growth amidst sluggish demand

By Le Hoai An (*) & Nguyen Thi Ngoc An (**)

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The banking system has seen lower-than-expected credit growth this year, at 1% as of mid-February. Though the State Bank of Vietnam (SBV) has taken multiple measures to stimulate credit expansion since the start of the year, the demand for loans has remained sluggish, indicating banks might have a rough year in 2024 when it comes to boosting credit growth. At the outset of 2024, the SBV set a credit growth target of 14.5%. This decisive move reflects the central bank’s recognition of ongoing economic challenges, underlining the crucial role of credit support from the banking sector in aiding the economy. However, early indicators suggest that obstacles persist, as evidenced by the credit growth statistics thus far this year. State-owned banks have reported a 3.2% drop in lending compared to December 2023. This decline, amounting to VND240 trillion, is particularly impactful given that outstanding loans at the four major State-run banks collectively total around VND8 quadrillion. A thorough examination of banks’ credit growth patterns in the fourth quarter of 2023 will provide valuable insights into the potential trajectory of credit expansion in the near future. Credit growth of 27 listed banks Credit surged across all listed banks in the fourth quarter […]
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