Banks increase credit programs to support people and businesses

Low credit growth

Recently, commercial bank branches in the area have proactively and actively implemented the directions and management of the Government, the Prime Minister, the State Bank of Vietnam and the provincial State Bank to increase access to credit capital for people and businesses, to remove difficulties and restore production and business. However, the credit growth rate is still low, the implementation results of some credit programs have not met expectations. By the end of 2023, the province's credit growth will only reach 6.2%, while the credit growth target set by the provincial State Bank branch in early 2023 is 14 to 15%.

This creates considerable growth pressure for 2024, in the context that credit growth in January and the first half of February of the entire system was not as expected. At the online conference of the entire banking industry on promoting credit to promote economic growth in 2024, the State Bank of Vietnam said that in January and the first half of February, credit growth of commercial banks tended to decrease. In particular, the joint-venture bank group recorded the sharpest credit decrease at 3.41%; 100% state-owned banks decreased by 2.2%; the group of state-owned joint-stock commercial banks decreased by 0.88%; the group of joint-stock commercial banks decreased by 0.51%; the group of foreign banks decreased by 0.32%.

However, according to the affirmation of the Standing Deputy Governor of the State Bank of Vietnam Dao Minh Tu, the decrease in credit growth does not stem from the policy mechanisms of the banking sector, but mainly from internal problems of the economy.

The seasonal nature of the economy is the most obvious factor when the short-term capital turnover cycle of enterprises usually ends mainly at the end of the year; while at the beginning of the year, both people and enterprises often limit borrowing capital. Therefore, in the first 2 months of the year, credit growth often tends to decrease. In addition, in the context of general economic difficulties, the business situation faces many difficulties. In the first 2 months of the year, there were very few new investment projects implemented, the number of newly established enterprises decreased while the number of enterprises withdrawing from the market still tended to increase, leading to low demand for credit access.

Since the beginning of the year, banks have implemented many preferential credit policies.

Need to strengthen business support solutions

According to banks' forecasts, 2024 will continue to be a difficult year when economic growth drivers such as exports, consumption, industrial production, and private investment are still slow; business operations still face many difficulties. Thua Thien Hue is no exception to this general trend.

According to the forecast of the Provincial Statistics Office, in addition to favorable conditions from outstanding results in 2023 in terms of macroeconomic stability, good economic growth, improved investment and business environment, and stable people's lives. In 2024, Thua Thien Hue's economy is forecast to still face challenges from within the country and the economy. The service sector will find it difficult to achieve high growth when the tourism industry has almost no room left, while the decline in real estate has not shown signs of recovery. During the year, projects with new capacity in industrial production are expected to be put into operation and are expected to make a great contribution to the economy. However, in the context of global demand forecast to be difficult to recover, the production capacity of these factories will not operate at full capacity.

These forecasts partly reflect the great pressure on local economic growth in general and credit growth in 2024 in particular. The story of promoting credit growth to create momentum for economic growth at this time will no longer be a story of the banking industry.

In reality, to promote the economy, many necessary and sufficient conditions are needed, not just credit. This also puts the banking industry in a difficult position, because to increase credit growth, it is also necessary that the health of businesses must basically ensure credit requirements. Not to mention, there are many other factors that affect the credit needs of the economy such as the market, the business investment environment... or businesses themselves must recognize new investment opportunities, from which they can take advantage of financial resources to promote.

In conclusion, the stability and development of production and business activities of enterprises are prerequisites to promote credit growth as well as ensure the safety of the banking system. Because credit growth depends largely on the economy's ability to absorb capital. However, to increase the economy's ability to absorb capital or, more accurately, to promote business development in the current period, it is necessary to have great support from policies to stimulate domestic consumption; preferential policies to attract investment capital; policies to support early project implementation; and to build a friendly investment and business environment to help businesses operate smoothly.

Article and photos: HOANG LOAN