Unblocking credit flow at year-end

SGGP December 1, 2023 05:57

In the context of the weak absorption capacity of the economy , credit growth in the first 10 months of the year only achieved half of the set target. Currently, banks are making efforts to unblock credit to contribute to promoting economic growth.

Urgent capital injection

Although the interest rate level has decreased sharply, credit in the whole economy by the end of October 2023 reached 12.8 million billion VND, an increase of 7.39% compared to the end of 2022, still far from the target of 14% set by the State Bank of Vietnam (SBV), the lowest credit growth rate in many years. Therefore, recently, Prime Minister Pham Minh Chinh issued a telegram requesting the SBV to learn from experience in managing slow credit growth in 2022; review the credit granting results of each credit institution (CI) to have timely and effective measures to manage credit growth in 2023.

Many banks offer credit stimulus incentive programs. Photo: MINH HUY

In order to implement the above dispatch, the State Bank has just issued a document announcing the additional credit growth (room) for credit institutions. Accordingly, credit institutions with outstanding credit reaching 80% of the target will be proactively given additional limits; priority will be given to credit institutions focusing on credit in priority areas of the Government and lowering lending interest rates in recent times.

The SBV leader said that in July 2023, the SBV allocated credit limits to credit institutions with a total growth rate of 14.5%. However, the first 11 months of 2023 showed that economic growth still faced difficulties, the economy's capital absorption and credit demand were still weak, so by November 22, the credit growth of the entire system had only reached 8.21%. The credit growth rate of the credit institution system was uneven, some credit institutions had quite high growth, some had low growth, and some even had negative growth.

“The State Bank has proactively and flexibly adjusted credit room in the entire system from credit institutions that do not fully utilize their credit room to credit institutions that need to expand credit growth. From now until the end of the year, the State Bank will continue to closely monitor market developments to have timely and appropriate management solutions, proactively supplementing liquidity support limits to create conditions for credit institutions to supply credit capital to the economy,” the State Bank leader affirmed.

The investor has just announced a bank loan of 100 billion VND to complete the Khai Vy Mixed Residential and Commercial Area project in District 7, Ho Chi Minh City. Photo: HOANG HUNG

Take advantage of the "seasonal" factor

Since the beginning of November, commercial banks have not only simultaneously reduced lending interest rates by 1-2% per year, but have also offered many preferential interest rate packages for businesses, business households and even for individuals to borrow for consumption to stimulate credit demand.

Speaking to SGGP Newspaper reporter, Mr. Nguyen Van Bach, Head of Agribank Credit Policy Department, said that although short-term interest rates at Agribank have decreased by 1.3-4%/year since the beginning of the year, to stimulate credit demand, Agribank is continuing to implement 5 incentive programs for businesses with a scale of 165,000 billion VND, with a maximum supported interest rate of 2%. In addition, the bank is having a package of 10,000 billion VND for medium and long-term loans with very preferential interest rates.

“The programs are progressing well, reaching 30% progress and Agribank continues to seek customers with the goal of increasing credit growth by 2-4% in the last months of the year,” said Mr. Nguyen Van Bach.

Mr. Tran Hoai Phuong, Director of HDBank Corporate Clients, also shared that HDBank is creating all conditions to complete documents and procedures for businesses to access the bank's preferential loan packages.

From a state management perspective, Mr. Nguyen Duc Lenh, Deputy Director of the State Bank of Vietnam, Ho Chi Minh City branch, said that by the end of October, credit in Ho Chi Minh City increased by 4.67% compared to the end of 2022, lower than the general credit growth rate of the whole country. To clear the credit flow in the remaining months of the year, the banking industry will focus on exploiting the seasonal nature because capital demand often increases during Tet.

“The banking sector in Ho Chi Minh City has allocated VND9,000 billion for market stabilization loans with short-term interest rates of 4-6%/year to help businesses access cheap capital to reduce the cost of goods during Tet. In addition, we will continue to promote capital connections through the Bank-Business Connection Program, implement credit packages supporting 2% interest rates according to Decree 31 of the Government, and a VND120,000 billion credit package for social housing loans... to promote credit growth and economic growth in Ho Chi Minh City,” said Mr. Nguyen Duc Lenh.

Associate Professor, Dr. NGUYEN DUC TRUNG, Principal of Banking University of Ho Chi Minh City: The current credit growth rate is appropriate.

With the current credit growth rate of the entire economy, even if we take advantage of seasonal factors, it will be difficult to achieve the target of 14%. However, in the real context, if GDP only increases by 4.7-5%, credit only needs to reach 11-12%. Thus, the current credit growth rate is appropriate.

Dr. VO TRI THANH, Director of the Institute for Brand Strategy and Competition Research: Flexible adjustment

The State Bank has set a credit growth target of 14-15% but needs to flexibly adjust it to suit the developments and actual situation. Currently, Vietnam is using excessive financial leverage because the credit to GDP target of 124% is too high, while the average is 110%. In the future, when the capital market develops, Vietnam's credit will be below 10%, not 13-15% as it is now.

Source: https://www.sggp.org.vn/khoi-thong-dong-von-tin-dung-cuoi-nam-post716433.html