Total credit demand expected to improve in the last months of the year

	Recovery underway, businesses need to accelerate credit
	Credit growth remains far from government’s target

Promoting credit growth conference 2024

Credit growth near six months increases by 3.8%

Speaking at the Banking Sector Conference on promoting credit growth in 2024 on June 19, Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong stated that the Prime Minister has mandated a credit growth target of 5-6% by the end of the second quarter of 2024 and 15-16% for the entire year. Additionally, while promoting credit growth, it is crucial to ensure system safety, focusing credit on economic growth drivers and new trends such as green credit.

From now until the end of the year, with the decisive actions and directives of the Government, the Prime Minister, and ministries in improving the business and investment environment and markets, along with addressing difficulties for businesses and citizens, the SBV anticipates optimistic credit growth in the last months of the year.

Accordingly, the SBV has implemented various tasks and solutions, ranging from refining mechanisms and policies to directing credit activities and interest rates, and accelerating the disbursement of credit programs and policies. Notably, the credit package for the forestry and fishery sectors has been increased to VND30,000 billion. There are also proposals to amend the VND120,000 billion social housing program to offer more incentives.

Additionally, the SBV is enhancing communication, conferences, and local connections to resolve difficulties and facilitate credit provision by credit institutions (CIs) and improve access to credit for businesses and citizens.

According to SBV reports, as of June 14, 2024, credit growth increased by 3.79% compared to the end of 2023. The credit growth rate has gradually improved over the months, with the credit volume provided by CIs to the economy in the first six months of 2024 surpassing that of the same period in the previous three years.

However, in some localities, credit growth remains low, with certain CIs experiencing lower-than-average credit growth or even negative growth.

The SBV recognizes that overall domestic credit demand has not yet seen a strong recovery, with many traditional economic drivers still facing challenges. Some customers needing loans have not developed feasible business plans or met borrowing conditions, alongside shifts in consumer trends.

Nguyen Thanh Tung, CEO of Vietcombank, shared that as of June 17, Vietcombank's credit grew by 2.4% from the beginning of the year. This represents a significant effort by the bank, as there were periods of negative growth due to low capital absorption by the economy. Recently, Vietcombank has implemented numerous measures to promote credit, such as improving credit approval processes, applying technological solutions, and increasing online disbursement.

Pham Toan Vuong, CEO of Agribank, projected that by June 30, the bank's credit growth would reach nearly 3% compared to the beginning of the year.

He also pointed out various challenges in credit growth, such as difficulties in sectors like real estate and retail consumption, inconsistencies in policy implementation at the grassroots level, especially regarding land and transfer procedures, and global economic impacts from political instability and inflation.

Therefore, to promote credit growth, Agribank will continue to focus on agricultural credit, especially in key sectors like rice and fertilizers, as well as credit in industrial and manufacturing sectors, and expand social housing loans to meet market demands in industrial areas.

Aiming to achieve system-wide credit growth targets

Alongside banking solutions, representatives of other banks also emphasized that credit growth speed did not solely depend on the banking sector's subjective will but largely on the economy's capital absorption capacity.

Governor Nguyen Thi Hong mentioned that although the SBV allocated the entire credit growth limit (room) to banks at the beginning of the year, the growth rates among banks vary. Therefore, she suggested that banks discuss credit room coordination if there are obstacles to achieving the system-wide credit growth target.

Resolution No. 93/NQ-CP dated June 18, 2024, by the Government on key tasks and solutions to promote growth, control inflation, and stabilize the macro-economy, mandated the SBV to work with CIs, especially state-owned commercial banks, to continue directing cost reduction, enhance IT application, and digital transformation to further lower lending rates, promote credit growth, and focus on business production, priority sectors, and economic growth drivers.

The SBV stated that in the last six months of the year, it would continue to manage monetary policy proactively, flexibly, timely, and effectively, coordinating harmoniously and tightly with fiscal policy and other macroeconomic policies to support economic growth according to the Government's targets.

"With macroeconomic stability, controlled inflation, and stable interest rate management aimed at gradually lowering the overall interest rate level in the economy, the SBV will also balance interest rates and exchange rates. It will continue to encourage CIs to reduce costs to lower lending rates, harmonize lending and deposit interest rates, and require CIs to publicly disclose average lending rates," the SBV emphasized.