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Wednesday, July 24, 2024

Outstanding loans at HCMC banks plummet in early 2024

By Dung Nguyen

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HCMC – The demand for loans in HCMC has remained woefully low, with total outstanding loans declining in the year to date.

In January, total outstanding loans in the banking system in the city fell by 0.93% against the previous month and 9.27% compared to the same period last year, at over VND3.5 quadrillion, according to the HCMC branch of the State Bank of Vietnam (SBV).

This decline surpasses both the 0.48% decrease recorded during the same period last year and the nation’s average of 0.6%.

Nguyen Duc Lenh, deputy director of the SBV HCMC Branch, attributed the bigger fall primarily to seasonal factors. However, he pointed to the weaker borrowing demand and the economy’s limited capacity to absorb new investments as contributing factors.

Businesses increased their borrowing in the last quarter of 2023, especially to support holiday production and sales. However, this surge is expected to be temporary, as these loans typically have short terms and are repaid around the Lunar New Year.

Actual data for January showed a 2.32% decrease in short-term outstanding loans in HCMC, while medium and long-term loans continued to increase by 0.35%.

Encouraged by positive indicators such as rising manufacturing orders, and an improved labor market, the city’s banking sector is weighing more lending rate cuts. Lenh said these adjustments would be made based on each bank’s financial capacity.

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