The challenge of redirecting credit.

The State Bank of Vietnam is curbing credit growth, striving to redirect capital flows into production and business. However, with credit remaining the primary engine of economic growth, capital restructuring faces numerous challenges.

By 2025, nearly 60% of the economy's capital will rely on credit. Photo : Duc Thanh

Redirecting credit policies: This can't happen overnight.

The State Bank of Vietnam has just announced a 15% increase in credit growth this year, meaning the banking system will inject 2.8 trillion VND into the economy – equivalent to the figure for 2025. The slowdown in credit growth, amidst strong capital flows into real estate and rapidly rising interest rates threatening macroeconomic stability, is considered a positive development.

Mr. Pham Hong Hai, General Director of Orient Commercial Bank (OCB ), believes that focusing on quality rather than scale of growth is a positive sign for the market. For the banking system, growth based too heavily on credit will lead to systemic risks, especially bad debts. For the economy, rapid credit growth can put pressure on interest rates, exchange rates, and inflation, so tightening credit is reasonable.

Along with curbing credit growth, this year the State Bank of Vietnam also required credit institutions to strictly control the growth of real estate lending, ensuring that the growth rate does not exceed the overall credit growth of the bank itself. This requirement was issued in the context of real estate credit increasing by approximately 34% by the end of November 2025, with outstanding loans reaching 4.5 trillion VND, accounting for nearly 25% of the total outstanding loans in the entire economy.

That's the direction, but the question is whether the executives will achieve their desired goals?

Currently, state-owned commercial banks (Big 4) hold only 43% of the market share, while the remaining 57% belongs to private joint-stock commercial banks. Most private joint-stock commercial banks are currently linked to real estate conglomerates or the real estate ecosystems of their owners. Therefore, even with the State Bank of Vietnam's guidance, it is not yet possible to direct the credit flow from this 57% market share in the right direction.

The banking sector faces numerous pressures.

- Ms. Nguyen Thi Hong, Governor of the State Bank of Vietnam

The government is aiming for double-digit growth coupled with innovation in the economic growth model, while ensuring macroeconomic stability and major economic balances. This is a high target, and the banking sector recognizes that it aligns with its political mission.

Many factors contribute to economic growth, including capital, human resources, and innovation. In particular, the Party and the State have identified innovation and digital transformation as the main drivers of growth in the coming period.

The economy's capital comes from many sources, including bank credit. Currently, the credit-to-GDP ratio is very high compared to countries with similar conditions to Vietnam. Therefore, the banking sector faces significant pressure in fulfilling its multi-objective tasks in the coming period.

According to Mr. Tran Ngoc Bau, CEO of WiGroup, the growth model cannot shift immediately, meaning that this year's economy will still grow based on credit, and credit will continue to flow into sectors such as real estate and public investment.

Similarly, according to economist Pham Xuan Hoe, although the State Bank of Vietnam states that 70-80% of current credit is concentrated in priority sectors, if the production sector serving real estate is excluded, the proportion of credit flowing into actual production and business is still much lower.

Therefore, curbing credit growth is essential. The amount of credit increases is less important than the channel through which it flows. If credit increases sharply, but mainly flows into refinancing bank loans, bond debt, or real estate, it will not be sustainable. Meanwhile, many sectors that are supposed to be encouraged, such as technology and the green economy, have yet to improve.

Research data shows that in 2025, nearly 60% of the economy's capital will come from credit (only 15% from stocks and corporate bonds). In 2026, with a target of 10% GDP growth, the economy will certainly still rely primarily on credit and public investment, given the modest levels of productivity and technological innovation.

"Despite numerous resolutions being issued, in reality, our technology – with the exception of a few like software and banking – is mostly still in its early stages. This is why achieving 10% growth this year still relies on fiscal and monetary expansion. To escape this situation, we must create breakthroughs in governance, including breakthroughs in institutions as well as breakthroughs in science and technology," Mr. Hoè analyzed.

Moreover, in a context where many small banks are still struggling to survive by relying on the ecosystem of real estate owners, struggling to raise capital, and struggling to restructure, portfolio restructuring and customer segmentation become even more difficult.

This shows that redirecting credit is inseparable from restructuring banks and transforming the economic growth model.

How can I "wean" myself off some of my credit oxygen?

The target of double-digit GDP growth is putting significant pressure on the banking sector. According to experts, the current ratio of medium and long-term loans in the banking system has reached 47%, while medium and long-term deposits only account for 20%. The difference between medium and long-term deposits and loans amounts to 5 trillion VND, making liquidity risk and maturity risk a constant burden on the banking system.

Mr. Pham Hong Hai argued that banks cannot be relied upon as the sole source of capital for the economy. For sustainable growth, it is essential to develop both the capital market and fiscal policies.

The root cause lies in developing capital markets.

- Mr. Pham Hong Hai, General Director of OCB

This year, the State Bank of Vietnam will not loosen credit as much as in 2025, so the credit limit allocated to banks will be lower. Therefore, our focus in the coming period will be on quality growth and growth in non-credit products, reducing dependence on credit.

I believe that banks cannot be the sole source of long-term capital for the economy, as the liquidity risks are very high. To provide sufficient medium and long-term capital for the economy, the fundamental issue is to develop the capital market (bonds, stocks) and institutions such as insurance and pension funds.

"In the past, fiscal policy has been very effective, but developing the capital market requires a long-term plan with clearer milestones. Hopefully, we will look at the issue of supplying capital to the economy through various channels, not just bank credit," Mr. Pham Hong Hai expressed.

According to the CEO of OCB Bank, the key solution to the medium and long-term capital problem for businesses must be the bond market, stocks, and financial institutions such as insurance companies and pension funds. Banks mainly raise short-term capital; if they lend too much in the medium and long term, it will affect capital safety and liquidity.

Regarding this issue, Mr. Nguyen Quang Thuan, Chairman of FiinRatings, believes that to achieve high growth targets in the coming period, without a suitable capital structure, financial risks will be very high. The fact that some renewable energy companies, despite having good business models, still went bankrupt due to a lack of medium and long-term capital in the past is a typical example.

"The reality in Vietnam over the past period shows that public investment and bank credit are the two main sources of capital, but there is not much room left, especially for bank credit outstanding. Growth based on prolonged credit expansion will be very risky. I expect the capital market to develop, especially the corporate bond and stock markets, thereby reducing pressure on the banking system," Mr. Thuan recommended.

On the positive side, according to Mr. Nguyen Quang Thuan, this year the corporate bond market will experience a boom, with new issuance volume surging to approximately 1 trillion VND, nearly double that of 2025, offsetting the decline in long-term credit from commercial banks.

Furthermore, Mr. Tran Ngoc Bau expects that this year, foreign capital inflows will be better, partially offsetting domestic liquidity. Over the past two years, the significant pressure to repay government net debt has put strain on exchange rates and bank liquidity. If foreign capital flows strongly in the coming period, system liquidity will be supported.

In summary, according to experts, there is still room for growth in the coming period, but it will mainly depend on fiscal policy, and there is not much room left for further loosening of monetary policy. Specifically in 2026, monetary policy will remain loose at a similar level to 2025. At the same time, the policy interest rate will be maintained at its current level (while market interest rates are likely to rise slightly) to support the economy.

Source: https://baodautu.vn/thach-thuc-khi-be-lai-tin-dung-d497327.html