Why is credit growth slow in the first two months of 2024?

A representative from the State Bank of Vietnam stated that banks currently have abundant liquidity, but in reality, after two months of implementation in early 2024, credit growth has been slower compared to the same period in previous years.

At the regular government press conference in February 2024, held on the afternoon of March 2nd, in response to questions from the press regarding the reasons for the low credit growth and solutions for the future, Deputy Governor of the State Bank of Vietnam (SBV) Pham Thanh Ha stated: The State Bank of Vietnam had allocated all 15% credit growth targets to credit institutions by December 31st, allowing them to proactively manage credit growth.

In reality, after two months of implementation in early 2024, credit growth has been slower compared to the same period in previous years, despite abundant liquidity.

According to Mr. Pham Thanh Ha, the general reason is due to seasonal factors. January and February are the months of Tet (Lunar New Year), so credit activity decreases and lending activity does not grow as much as in the fourth quarter of the previous year. In addition, the global economy has not really recovered, and our main markets have not developed strongly, affecting output and exports. Meanwhile, the domestic market is still facing difficulties, so the demand for credit has also decreased.

Regarding solutions to address the issues, Mr. Pham Thanh Ha stated: At the beginning of February, the State Bank of Vietnam issued a directive to credit institutions to focus on boosting credit growth, strengthening the review and simplification of lending procedures to increase customers' access to capital; and to concentrate on strengthening digital transformation applied to credit processes to increase access to capital and more widely popularize banking credit activities.

At the same time, a nationwide conference will be organized to promote bank credit, support businesses, and boost credit growth.

During the first two months of the year, credit growth slowed compared to the same period in previous years. (Illustrative image)

In the coming period, the State Bank of Vietnam will continue to review documents in accordance with the newly enacted Law on Credit Institutions; and review guiding documents and decrees to ensure amendments are in line with the decrees and the Law, increasing access to credit for borrowers.

From the lender's perspective, liquidity is abundant, and banks are ready to provide capital to the economy. However, more coordinated policy action from various agencies is needed to enhance businesses' access to credit.

On the borrower side, the State Bank of Vietnam also encourages businesses to actively implement restructuring solutions, develop more feasible investment or production and business projects, demonstrate the feasibility of their projects; and enhance their financial capacity to facilitate the assessment and provision of loan services to borrowers (credit institutions, commercial banks) in the future.

Source: https://phunuvietnam.vn/tai-sao-tin-dung-tang-truong-cham-trong-2-thang-dau-nam-2024-20240302203834976.htm