Credit continues to increase at the end of the year, room is loosened to avoid "surplus in some places - shortage in others"

By November 22, 2024, system-wide credit will increase by 11.12% compared to the end of 2023. Photo: ST

Since the beginning of 2024, the State Bank of Vietnam (SBV) has assigned credit growth targets (room) to banks with an increase of about 15%.

By August 28, 2024, banks that have lent more than 80% of the credit targets granted since the beginning of the year have been granted additional limits by the SBV.

Recently, on November 28, 2024, the SBV issued a notice to adjust and increase the credit room in 2024 for credit institutions according to specific principles, ensuring publicity and transparency.

The SBV said that the expansion of the credit room was carried out under the condition that inflation was controlled below the set target, implementing the Government's direction on effective credit growth management, and meeting capital needs for the economy

However, the SBV did not announce in detail the conditions for deciding on the room expansion level for banks, nor did it announce the list of banks with expanded rooms.

According to the financial reports of the third quarter of 2024 of banks, many banks have strong credit growth.

For example: Techcombank (up 20.8%), NCB (up 16.3%), LPBank and HDBank (both up 16.1%), Nam A Bank (up 15.8%), MB (up 14.9%), TPBank and MSB (both up 14.4%)...

The group of state-owned banks has outstanding credit growth of about 10%, while the credit growth limit assigned at the beginning of the year with Vietcombank is the highest at 15.9%, Vietinbank and BIDV are both assigned 14% and Agribank is the lowest at 12.5%.

At the recent extraordinary general meeting of shareholders, LPBank's leaders said that by the end of October 2024, credit growth reached 18%, almost running out of the temporarily allocated credit room.

Therefore, the above banks are likely to be in the group that will have their credit room expanded for the second time.

According to the SBV, by November 22, 2024, the entire system's credit increased by 11.12% compared to the end of 2023. This figure is lower than expected and is a small distance from the annual credit target of 15%.

The fact that the SBV continues to expand the room shows that credit growth among banks is very differentiated.

Because the nine-month financial report statistics show that besides the banks with high credit growth as above, there are still many banks with very low growth such as ABBank (up 0.7%), Saigonbank (up 2.2%), Bac A Bank (up 4%), PGBank (up 4.4%)...

Therefore, according to experts, the SBV expands the room to create conditions for banks with the ability to increase credit growth, avoiding "surplus in some places - shortage in others".

This ensures that the entire system's credit can reach the target of 15% for the year.

According to a recent macro analysis report by VNDirect Securities Company, credit growth this year can still reach 14-15%.

VNDirect believes that credit demand will continue to increase towards the end of the year.

This will encourage banks to compete by continuing to adjust deposit interest rates to attract new capital.

Previously, VPBankS Research's report assessed that the SBV's policy of loosening credit room would be a driving force for banks to compete more strongly in gaining credit room and market share.

Therefore, interest rate policies will tend to be more favorable, beneficial to borrowers but may lead to a slight decrease in banks' net interest margin (NIM).

According to economic expert Associate Professor Dr. Dinh Trong Thinh, Vietnam's economy relies too heavily on credit, if credit increases rapidly, the economy will face many consequences.

So it is understandable that the SBV wants to maintain the credit room management mechanism.

However, experts recommend that removing the credit room still needs to be done and the SBV can control credit growth through market tools such as required reserves, capital adequacy ratio (CAR), profit margin, etc.