The State Bank said it will carefully evaluate and report to the Government a roadmap for removing the credit room - Illustration photo: QUANG DINH
At a press conference on the banking sector's performance in the first 6 months of the year, held by the State Bank of Vietnam (SBV) on July 8, Mr. Pham Chi Quang, Director of the Monetary Policy Department (SBV), affirmed this when talking to the press about the Prime Minister 's direction in removing the credit limit (room).
According to Mr. Quang, the State Bank will carefully evaluate before reporting to the Government the roadmap for removing the credit room.
Moving towards eliminating credit room
According to Mr. Quang, the State Bank of Vietnam has been managing credit growth since 2012, a time of many difficulties in the context of credit growth at times, averaging 32%/year, with some years increasing up to 54%, beyond the control of credit institutions. At the same time, interest rates in the market increased very high and fell into a spiral of unhealthy competition.
To address this issue in order to contribute to stabilizing the macro economy , controlling inflation, maintaining the safety and preventing the collapse of the credit institution system, since 2012, the State Bank has been operating the credit growth room. However, according to Mr. Quang, no tool is permanent. And recently, the State Bank has had a roadmap to improve and innovate the management of monetary policy.
Specifically, in 2024, the SBV assigned credit targets to credit institutions from the beginning of the year. By 2025, the SBV had removed the assignment of credit growth targets to foreign banking groups, foreign bank branches, joint venture banks, and institutions of non-bank credit institutions. Thus, only domestic commercial banks are assigned credit growth targets.
"This is a roadmap towards completely removing credit growth quotas in the coming time. However, the past consequences and difficulties of the credit system still exist. Therefore, to remove credit room quotas, the State Bank needs to have measures and policies suitable to the specific conditions of Vietnam.
The goal is to both increase the initiative of credit institutions and ensure system safety, economic security, and control inflation," said Mr. Quang.
According to Mr. Quang, if the credit room is removed, interest rates will increase. One of the measures recommended by international organizations is that the State Bank must be very proactive in managing interest rates. "Therefore, the State Bank will carefully consider and assess the policy impact very carefully to report to the Government and the Prime Minister on the roadmap for removing the credit room in the coming time," Mr. Quang added.
There is still a risk of inflation rising again.
Also at the press conference, Deputy Governor of the State Bank of Vietnam Pham Thanh Ha said that early in the morning of July 8, the US announced a 25-40% tax rate on 14 countries, effective from August 1, and warned that it would increase the tax rate if these countries retaliated, showing that the global economy still has many uncertainties in the coming period.
"Although inflation has cooled down to the target level, there is still a risk of it rising again. Thus, potential risks in the world financial and monetary markets create pressure on monetary policy management, exchange rates, domestic interest rates as well as the implementation of the target of supporting economic growth of 8% or more in 2025," said Mr. Ha.
Meanwhile, according to Mr. Pham Chi Quang, since the beginning of the year, the US government has changed its policies rapidly, including economic, fiscal and especially monetary policies. This has led to large fluctuations in the USD, which has decreased by about 10%, and at times even decreased by more than 10%. The decline of the USD has benefited many currencies, especially those in the Asian region.
However, VND is still depreciating, down about 2.7 - 2.8% compared to USD. To maintain the strength of the currency, according to Mr. Quang, the currency must be attractive. Attractiveness is partly achieved through interest rates. However, in recent times, the State Bank has implemented management policies to maintain low interest rates, supporting economic growth.
"To have low interest rates, there must be certain trade-offs, including exchange rates, because when maintaining low interest rates, the interest rate difference between VND and USD will be negative. Thus, organizations will convert to other more attractive currencies to hold," said Mr. Quang, adding that although Vietnam's balance of payments is still stable and the trade balance is still in surplus, the withdrawal of foreign capital from the stock market from 2024 to now has put pressure on the foreign exchange market.
"Vietnam's economy is highly open, with a large export market, especially to the US, so tax policies will affect exchange rates and interest rates in the future when capital flows between countries," Mr. Quang commented.
Agriculture, forestry and fishery sector accounts for 6.7% of credit structure in the first half of this year - Photo: Q.D.
More than 17.2 million billion VND poured into the economy
Speaking to the press at a press conference, Mr. Pham Thanh Ha said that as of June 30, the entire system's credit reached 17.2 million billion VND, an increase of 9.9% compared to the end of 2024. This is the highest growth rate since 2022. Regarding the average lending interest rate (applied to new loans), the current average lending interest rate is 6.24%/year, down 0.64% compared to the end of 2024.
Of which, the agriculture, forestry and fishery sector accounts for 6.37%; the processing and manufacturing industry accounts for 12.84%; the construction industry accounts for 7.53% (including infrastructure investment projects that the Government is directing to promote investment).
Wholesale and retail trade; repair of automobiles, motorcycles, motorbikes and other motor vehicles has the largest outstanding debt in the whole system, accounting for 23.74%. Real estate business activities account for 18.47%. Activities of hiring jobs for households, production of material products and services for household consumption account for 12.91%.
Some sectors with a large proportion in the total outstanding credit in the economy continued to grow well. Among them, sectors contributing to promoting growth, such as: agriculture, rural areas and small and medium enterprises continued to be the sectors with a large proportion in the total outstanding credit of the economy, respectively 23.16%, 17.51%, up 5.31%, up 5.71%.
The supporting industry sector and high-tech enterprises have credit growth rates higher than the growth rate of the economy, at 15.69% and 17.59%, respectively.
The State Bank affirms that it always closely monitors developments in the domestic and international macroeconomics, financial and monetary markets to develop appropriate management scenarios, proactively, flexibly, promptly and effectively manage monetary policies, and closely coordinate with fiscal policies and other macroeconomic policies to contribute to prioritizing economic growth while maintaining macroeconomic stability.
According to Mr. Pham Chi Quang, credit growth plays a very important role in supporting economic growth of over 8% this year. Credit growth as of June 30 reached nearly 10%, the highest increase since 2022, 2.5 times higher than the same period in 2024.
"We are not subjective about inflation but closely follow developments to manage credit according to the set targets and focus on priority areas. In addition, bad debt is under control, the State Bank continues to adjust credit space from now until the end of the year to grow at a reasonable level, ensuring contribution to economic growth," Mr. Quang informed.
Removing credit room is appropriate
Speaking to Tuoi Tre, Mr. Nguyen Quoc Hung, general secretary of the Banking Association, said that removing the credit room is very appropriate to increase the initiative of banks, especially in the context that large banks have applied Basel 3 standards. Moreover, the financial capacity of banks is improved when charter capital is increased annually.
"In addition, based on the ability to mobilize capital and the market's demand for loans, banks will proactively lend.
"To avoid the situation where there is still capital but cannot lend it out because of the credit growth limit," Mr. Hung said, adding that to be autonomous in credit growth, banks must build their own safety coefficients to ensure the safety of capital and recover debts.
From the perspective of a management agency, according to Mr. Hung, the State Bank needs to develop a set of criteria on safety indicators to manage and monitor credit growth of banks.
"For example, what is the safety coefficient for real estate loans, what is the ratio of short-term capital mobilization for long-term loans?... The goal is to ensure the safety of the credit institution itself as well as the safety of the system," Mr. Hung suggested.
Source: https://tuoitre.vn/bo-room-tin-dung-tang-chu-dong-cho-ngan-hang-20250709080024604.htm
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