Credit growth is striving to reach its target.

Credit growth remained slow in the first six months of the year. Photo: Bao Chuong

According to the State Bank of Vietnam (SBV), credit growth as of August 16th increased by 6.25% compared to the end of 2023, while previously, by the end of July 2024, the total outstanding loans in the entire economy increased by 5.66%, lower than the figure recorded at the end of June of 6.1%.

In Ho Chi Minh City, by the end of July 2024, the total outstanding credit balance reached VND 3,680 trillion, a slight decrease of 0.09% compared to the previous month and an increase of 11.47% compared to the same period last year. Of this, VND-denominated credit increased by 4.54% compared to the previous month and by 13.52% compared to the same period last year.

Mr. Nguyen Duc Lenh, Deputy Director of the State Bank of Vietnam in Ho Chi Minh City, said that credit in July 2024 decreased slightly, mainly due to short-term loans maturing and a decrease in foreign currency loans. However, the socio-economic situation and business activities of enterprises maintaining a positive growth trend are important environmental factors to promote credit growth in the remaining months of 2024.

According to some experts, the economy's ability to absorb capital remained slow in the first half of this year. This is due to the seasonal nature of the first quarter and weak market demand, as the real estate market has not yet fully recovered.

VCBS Securities Company forecasts that credit growth in 2024 will reach 12-13%. The driving force behind this growth will come from robust production and export activities, boosting the disbursement of public investment, especially key projects with high spillover effects such as infrastructure investment projects; and the gradual recovery of the real estate market from the second quarter of 2024, leading to credit growth in the real estate, construction, and home purchase loan segments.

VPBank Securities believes that the 14.83% credit growth target for this year is achievable, given expectations of a strong consumer and business season in the second half of the year, and further expectations of a Fed interest rate cut, supporting Vietnam's "counter-trend" monetary policy.

In the second half of the year, to achieve the target, the economy needs to inject an additional 8.73%, equivalent to over 1.18 trillion VND, into the market. However, VPBank Securities' analysis team remains concerned that achieving 14-15% annual credit growth is a significant challenge due to Vietnam's already excessively high credit-to-GDP ratio. Furthermore, credit growth is considered a criterion for evaluating banks and used as a basis for allocating credit limits for the following year, which will indirectly encourage banks to push through their entire credit limits.

Experts at VPBank Securities believe that credit growth is largely driven by the real estate sector. By the end of the second quarter, outstanding loans in the real estate sector reached VND 3,083 trillion, a 6.8% increase since the beginning of the year, accounting for 21.4% of total outstanding credit in the entire economy. This is also the most important sector of the banking system.

Due to the huge demand for housing loans, VPBank Securities experts see significant room for lending in the banking sector; however, there is a potential risk of increased bad debt.

Meanwhile, although mortgage interest rates have decreased significantly over the past year, the situation regarding mortgage disbursement remains sluggish due to persistently high housing prices relative to income and the banking sector's need for resources to address outstanding bad debts.

VPBank Securities expects supportive policies to promote more sustainable credit growth, typically through policies and mechanisms to regulate housing prices to match people's income levels and the VND 120 trillion social housing loan package. Experts expect changes in the new Real Estate Business Law and Housing Law to primarily benefit homebuyers, thus boosting credit growth.

Source: https://laodong.vn/kinh-doanh/tang-truong-tin-dung-no-luc-ve-dich-1386416.ldo