Credit growth decreased by 0.72% in the first two months of the year.

Báo An ninh Thủ đô•14/03/2024

ANTD.VN - As of February 29, 2024, credit to the economy decreased by 0.72% compared to the end of 2023. However, the rate of decrease in February slowed down (-0.05%) compared to January (-0.6%).

On the morning of March 14th, Prime Minister Pham Minh Chinh and Deputy Prime Minister Le Minh Khai chaired a conference to implement monetary policy tasks for 2024, focusing on removing difficulties for production and business, promoting growth, and stabilizing the macroeconomy.

Reporting at the meeting, Deputy Governor of the State Bank of Vietnam, Dao Minh Tu, stated that by the end of 2023, credit across the entire economy had increased by 13.78% compared to the end of 2022.

Due to the seasonal nature of the Lunar New Year holiday and the economy's limited capacity to absorb capital, credit to the economy decreased by 0.72% by February 29, 2024, compared to the end of 2023. However, the rate of decrease in February slowed down (-0.05%) compared to January (-0.6%).

With ample liquidity and significant room for credit growth, credit institutions are currently in a favorable position to provide loans to the economy.

According to the State Bank of Vietnam, there is currently a decrease in lending across most economic sectors. Two sectors showed growth in the first two months of the year: real estate lending, which increased by 0.23% compared to the end of 2023, and securities lending, which increased by 2.56% compared to the end of 2023.

Phó Thống đốc thường trực Ngân hàng Nhà nước Đào Minh Tú

Permanent Deputy Governor of the State Bank of Vietnam, Dao Minh Tu

Explaining the reasons for the negative credit growth in the first two months of the year, the Deputy Governor stated that, firstly, the unpredictable developments in the global economy, inflationary pressure, high global interest rates, complex fluctuations in the US dollar and gold prices, and the interest rate differential between USD and VND... are all factors negatively impacting the stability of the VND/USD exchange rate domestically, especially as VND interest rates are expected to continue to fall.

Secondly, there are difficulties in granting credit. Credit growth in the first two months of the year remained negative due to various obstacles.

Objectively, due to seasonal factors, the demand for credit capital usually increases at the end of the year and before the Lunar New Year, making it difficult for credit growth to occur rapidly in the first two months of the year.

The economy's demand and capital absorption capacity are low: Many businesses are downsizing or ceasing operations due to inflationary pressures, rising material prices; lack of orders; high input costs and production expenses, resulting in no demand for loans; people are increasing their reserves and reducing borrowing for spending; real estate credit accounts for approximately 21% of total credit, and high increases/decreases in real estate credit often cause increases/decreases in overall system credit.

Furthermore, some customer groups have a need but do not meet the loan eligibility requirements; especially small and medium-sized enterprises (SMEs) due to their small capital scale, limited capacity, lack of viable business plans, and the inability of solutions to increase access to credit through the Credit Guarantee Fund, the SME Development Fund, etc., have not been very effective.

In addition, there are difficulties in implementing some credit programs and policies, such as: for the 120,000 billion VND program, legal regulations related to social housing projects (land fund, procedures for buying and selling, valuation, etc.) still have many obstacles;

The number of apartment renovation and reconstruction projects is very small; some conditions for homebuyers are no longer suitable; for consumer loan packages, workers' incomes have decreased amidst rising unemployment and job losses, leaving them without the means to repay debts, leading to a decrease in consumer credit demand…

Regarding subjective reasons, the State Bank of Vietnam believes that some banks are still cautious in granting credit due to the increase in bad debts. Some old loans with high interest rates have been slow to be adjusted downwards to support businesses and individuals borrowing capital.

Some banks are slow to improve their loan procedures, especially with lengthy loan approval times and overly cautious valuation and collateral decisions.

The implementation of the collateral mechanism lacks flexibility, relying primarily on mortgaged assets, especially in the current sluggish real estate market. There is a lack of connection, interaction, sharing, and cooperation between customers and banks in directly exchanging information and finding solutions to overcome capital difficulties.

Low growth in capital mobilization through stocks, bonds, and FDI, along with unresolved difficulties in the bond and real estate markets, have led to a continued concentration of capital for growth in bank credit. The high credit-to-GDP ratio (approximately 133% at the end of 2023, up from around 125% at the end of 2022) poses potential risks to the financial and monetary system.

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