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SBV sets new credit growth limits for banks

The Saigon Times

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HCMC – Eight commercial banks have received new credit growth quotas for this year, with seven of them entitled to lend less than last year.

The credit growth limit of HDBank is 11%, MB Bank 9%, ACB 9.8%, VIB 9.5%, TP Bank 9.1%, VPBank 9%, BIDV 8.3% and MSB 13.5%. These rates are lower than the levels last year (see box below).

The above limits are applicable to the first quarter of this year and subject to change depending on market conditions.

The credit growth quota allocations are expected to breathe new life into the banking system amid a credit squeeze, as banks would step up lending, experts said.

However, credit would expand slowly during the first quarter of the year as capital absorption capacity in the economy remains weak during the period, according to bankers.

A recent report by the local securities brokerage VDSC said that the credit expansion rates of HCMC and Hanoi in the first two months of 2023 averaged out at 2% and 0.4%.

As credit growth in the nation’s two biggest cities was equal to over half of the growth rate of the economy, VDSC estimated that Vietnam’s credit growth would be around 1.1% by the end of February, below the 2.7% recorded in the same period last year.

This year, the State Bank of Vietnam aims for a credit expansion rate of around 14-15%.

The credit growth quota regime was introduced in 2011 when Vietnam’s economy was experiencing hyperinflation caused by the excessive money supply.

It puts a cap on the banking sector’s credit expansion and is announced by the SBV at the beginning of year.

Different commercial banks can get different credit growth quotas depending on their financial health, credit quality and credit management efficiency.

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