Higher credit growth provides impetus for accelerated economic growth.

In his article "Innovation, Creativity, Acceleration, Breakthroughs, Leading the Nation Steadily into an Era of Striving for Development, Wealth, Civilization, and Prosperity" published at the beginning of the new year, Prime Minister Pham Minh Chinh emphasized that to successfully achieve the strategic goal of Vietnam becoming a developing country with modern industry and high middle income by 2030, and a developed country with high income by 2045, maximum efforts must be made starting from 2025 to create breakthroughs to attract investment, strongly promote production and business, and strive to achieve a growth rate of at least 8% or higher under favorable conditions; thereby creating a solid foundation to achieve double-digit growth rates from 2026 onwards.

Credit is projected to increase by 16%.

With the above growth targets in mind, it is necessary to mobilize resources within the economy, in which bank capital plays an extremely important role. Following the Government 's directives, the State Bank of Vietnam (SBV) recently issued a document to credit institutions publicly and transparently announcing the principles for assigning credit growth targets for 2025. Accordingly, the SBV projects credit growth for the entire system in 2025 at approximately 16% and will continue to implement credit management solutions appropriate to macroeconomic developments to contribute to promoting economic growth and controlling inflation. The credit growth targets assigned to credit institutions are based on the 2023 ranking scores as stipulated in Circular 52/2018/TT-NHNN (amended and supplemented) multiplied by a coefficient applied generally to banks. According to experts, this is a proactive move by the State Bank of Vietnam to provide credit institutions with a basis for developing appropriate credit growth plans right from the beginning of the year. The projected growth figure of 16% has been considered and calculated by the regulatory body based on the actual situation and is consistent with the economic growth orientation for 2025.

To successfully achieve the strategic goal of Vietnam becoming a developing country with modern industry and high middle income by 2030, and a developed country with high income by 2045, maximum efforts must be made starting from 2025 to create breakthroughs that attract investment, strongly promote production and business, and strive for a growth rate of at least 8% or higher under favorable conditions; thereby creating a solid foundation to achieve double-digit growth rates from 2026 onwards.

Prime Minister Pham Minh Chinh

Experts also believe that a credit growth rate of 16% in 2025 is appropriate and achievable. In its latest report, MBS Research expects credit growth in 2025 to reach 15-16% based on two main factors. Firstly, the strong recovery of the Vietnamese economy in 2025, driven by improved manufacturing and trade activity thanks to increased domestic and international demand. This will allow the State Bank of Vietnam to maintain its loose monetary policy this year. Secondly, the high disbursement rate of public investment is expected to create jobs and support credit demand, aligning with Vietnam's economic recovery goals and the implementation of major infrastructure projects in the 2021-2025 period.

According to ACB Securities (ACBS), the corporate bond market is not expected to recover anytime soon, so bank credit will remain crucial. At the same time, ACBS also expects the real estate market to gradually recover in 2025, coupled with the government's promotion of public investment, thereby stimulating increased credit demand and supporting lending yields for banks in the second half of 2025.

According to Dr. Chau Dinh Linh from the Ho Chi Minh City University of Banking, the reciprocal relationship between credit growth and GDP has been very clear in recent years. Credit plays a crucial role in the "three-pronged engine" of investment, consumption, and import/export, driving economic growth. Compared to 2024, the projected 16% credit growth in 2025 is only slightly higher, but the absolute amount of capital injected into the economy will increase significantly.

However, this expert also emphasized the importance of ensuring the quality of loan capital, because bad debt remains a constant concern for the banking industry, especially in the context of unpredictable fluctuations in the global and domestic economies. Therefore, alongside promoting credit, banks need to focus on directing capital towards priority sectors that serve as a springboard for economic growth, avoiding the flow of capital into areas with high potential risks, and improving their credit assessment and evaluation capabilities.

Lower interest rates have been a positive support for individuals and businesses.

Moving towards eliminating credit limits.

Besides the projected credit growth rate, the State Bank of Vietnam also stated that it will continue to implement the roadmap to limit and eventually eliminate the allocation of credit growth targets to individual credit institutions, in accordance with Resolution No. 62/2022/QH15 dated June 16, 2022, of the National Assembly.

The move towards abolishing credit limits has been widely discussed recently to ensure that credit growth is managed according to market mechanisms. However, experts also agree that a specific and cautious roadmap is needed to gradually eliminate the current credit management mechanism.

According to Dr. Chau Dinh Linh, the State Bank of Vietnam's decision to maintain the credit limit policy since 2011 stems from Vietnam's actual conditions. The lessons learned from the period of rapid and uncontrolled credit growth have left extremely serious consequences, such as interest rate wars and a sharp increase in bad debts. Removing the credit limit is certainly necessary, but the State Bank of Vietnam needs to provide a specific and clear roadmap and conditions under which this tool can be removed while still ensuring the safety of the banking system. Although banks have made great efforts to improve their financial capacity and operational scale, there is still a disparity in the "health" of banks. Currently, many banks have adopted Basel II standards, and some even apply some Basel III regulations. However, to date, some banks have not yet adopted Basel II standards. Therefore, without limits, credit growth could easily exceed the management capacity of some banks. Meanwhile, the non-performing loan ratio tends to increase... affecting the restructuring process of the credit institution system in particular and the economy in general.

Sharing the same view, Dr. Le Duy Binh - Director of Economica Vietnam - affirmed that the Government is currently implementing many measures to support and alleviate difficulties in the capital market and the economy. However, the burden of supplying capital continues to fall on the banking system. Vietnam is also a country that has been warned by many international organizations about its outstanding debt.

The credit-to-GDP ratio is already high. Therefore, in the current context, the credit growth limit will somewhat ensure that credit growth is in line with GDP growth.

“In a specific roadmap, the removal of the credit limit tool could be considered. However, it needs to be approached cautiously, implemented step by step to ensure the necessary conditions are synchronized and consistent with market conditions,” Dr. Le Duy Binh recommended, noting that to remove the credit “barrier,” it is first necessary to develop a more diversified capital market, reducing the pressure of medium and long-term capital on the banking system. Next, it is crucial to strengthen the internal capacity and health of the banks. The banks themselves must improve their resilience and demonstrate their ability to manage risks effectively.

Source: https://thoibaonganhang.vn/tin-dung-tang-cao-hon-tao-dong-luc-cho-kinh-te-tang-toc-159546.html