Allocating credit room, motivation for banks to compete

Since the beginning of 2024, the State Bank has assigned all credit growth targets to credit institutions corresponding to a general growth rate of about 15%. However, up to now, along with the slow credit growth trend of the whole economy, the growth rate at banks has also been uneven.

According to the 6-month financial reports announced by banks, many banks have high credit growth rates such as LPBank at 15.2%, ACB at 12.8%, HDBank at 12.5%, Techcombank at 11.6%, MB at 10.3%, VPBank at 10.2%... But there are also many banks with lower growth than the general level such as SHB at 5.2%, VIB at 4.7%, TPBank at 4.0%, Agribank at 2.6%... even ABBank recorded a negative growth rate of more than 7% compared to the end of 2023.

Statistics from the SBV show that, as of August 26, 2024, the entire system's credit increased by 6.63% - still far from the target of 14-15% in 2024.

Therefore, from the end of August 2024, banks with a credit growth rate in 2024 reaching 80% of the target announced by the SBV in early 2024 will be proactively adjusted to increase their credit balance based on the credit institution's rating score.

"The addition of this limit is the initiative of the SBV and credit institutions do not need to request it”, the SBV emphasized.

Previously, at the SBV's regular press conference recently, SBV Deputy Governor Dao Minh Tu said that it would take strong action against banks with low credit growth, especially in the context that the SBV had allocated all credit limits to commercial banks since the beginning of the year. Therefore, the SBV would transfer the targets of banks with unmet credit growth to proactively create conditions for banks with the ability to develop credit in the coming time.

With these moves, in a recently published report, experts from VPBankS Research stated that this policy would be a driving force for banks to compete more in gaining credit room and market share. Therefore, interest rate policies would tend to be more favourable, beneficial to borrowers, but might have to be traded off with a slight decrease in net interest income (NIM).

According to VPBankS Research, banks completed 80% or more (such as ACB, HDBank, LPBank, Techcombank) would have their credit room increased to 18-18.7%.

Credit growth across the industry is expected to recover in the final months of the year. Photo: ST

Forecasting credit growth for the entire industry, VPBankS Research believed that if banks could push 90% of the credit room assigned from the beginning of the year, the State Bank of Vietnam did not increase the operating interest rate, GDP growth reached 6%, credit growth for the entire industry could reach 14.83%.

Also on this issue, experts from MBS Research predicted that credit growth could reach 14% in 2024 with a GDP growth scenario of 6.5% for the whole year.

According to MBS Research, lending activities would achieve many positive results as retail lending was expected to recover more strongly in the second half of 2024, led by consumer finance, credit cards and auto loans thanks to the effect of low lending rates. Along with that, home lending activities would maintain the same growth rate as in the first half of 2024 mainly due to the recovery of secondary real estate transactions.

For the corporate customer segment, MBS Research forecasted that import and infrastructure construction activities would be the main drivers of credit growth in the second half of 2024. MBS Research expected import activities to increase by 15-16% in 2024 thanks to the 18.5% growth achieved in the first 7 months of 2024.