Consumer credit acceleration: Macroeconomic drivers and risk management issues

In the last months of the year, spending and shopping needs often increase sharply, leading to the need for consumer loans. Along with credit for production and business, can consumer credit become a "fulcrum" for general credit growth, and how will bad debt risks be controlled when banks accelerate disbursement? In an interview with Banking Times, Associate Professor, Dr. Pham Manh Hung - Deputy Director of the Institute of Banking Science Research (Banking Academy) analyzed macro dynamics, warned of risks and suggested management and transparency solutions to both promote domestic demand and ensure system safety.

Assoc.Prof.Dr. Pham Manh Hung - Deputy Director of Banking Science Research Institute

Many reports show that spending and shopping demand often increases sharply in the fourth quarter, leading to demand for consumer credit. What do you think are the macroeconomic factors driving the growth of consumer credit at the end of the year?

Assoc. Prof. Dr. Pham Manh Hung: The strong growth of consumer credit in the fourth quarter of each year is a cyclical economic phenomenon, driven by the resonance of macroeconomic and seasonal factors. I also believe that the core driving force comes from the recovery of consumer confidence and the gradual improvement of real income.

Specifically, the economy is recording outstanding bright spots, creating strong confidence for the people. According to the General Statistics Office, by the end of the third quarter of 2025, GDP increased by 7.85% (with each quarter higher than the previous), and the whole year of 2025 is expected to increase by over 8%. This is the growth rate forecast by the World Bank (WB) to be the highest in Asia. When the economy shows signs of stability, people feel more secure about their personal finances and are willing to use financial leverage to meet large needs, especially buying valuable assets or repairing houses.

In addition, supportive monetary policy plays a key role. The State Bank has proactively managed interest rates flexibly, maintained operating interest rates at low levels and continuously directed credit institutions to reduce costs to reduce lending interest rates to support businesses and people. As a result, the lending interest rate level continues to trend downward, as of October 10, the average lending interest rate reached 6.55%/year, down 0.38%/year compared to the end of last year. This reduction in capital costs has directly stimulated credit demand.

Finally, the seasonal and cultural factors also increase the demand for consumer credit. The fourth quarter of each year is usually the peak shopping period, preparing for the Lunar New Year, leading to a large demand for travel, gifts and home purchases. The Government's promotional programs and stimulus policies also create a resonance effect, encouraging people to increase spending through credit.

In the context of reduced lending interest rates but uneven recovery of economic demand, can consumer credit at the end of the year become a "fulcrum" for general credit growth? Besides, does this create accompanying risks?

Assoc. Prof. Dr. Pham Manh Hung: In the context of reduced lending interest rates but uneven credit demand from large production and business sectors, consumer credit can absolutely become an important "fulcrum" for the banking system to achieve the overall credit growth target of the year. Consumer credit has the advantage of being flexible, small in scale and able to disburse quickly, helping to inject capital directly into the economy through personal spending, thereby stimulating domestic demand. This is an effective short-term lever to offset the delay of large production and business credit.

However, accelerating consumer credit always comes with risks. Bad debt risk is the top concern. While interest rates tend to decrease, the income of a segment of workers has not really recovered after the difficult period. This makes their ability to repay debt fragile. If banks evaluate loans too easily in the year-end disbursement race, the bad debt ratio in this segment will increase. If not well controlled, people's excessive debt can lead to personal financial instability and create risks that spread to the stability of the entire banking system.

Credit institutions are stepping up consumer lending to meet year-end credit targets. In your view, is this expansion facing any challenges regarding consumer behavior, debt repayment ability, or spillover effects on financial stability? What solutions do banks and financial lending businesses need?

Assoc. Prof. Dr. Pham Manh Hung: The expansion of consumer credit is currently facing dual challenges: the real risk of debt repayment and the psychological barrier of cautious consumers. Although borrowing costs have decreased, economic concerns still make many people prioritize paying off old or accumulated debts rather than taking out new loans, causing credit demand to fall short of expectations.

To overcome these challenges, credit institutions need to implement technological and sustainable solutions.

The first is to improve the quality of risk assessment by investing heavily in Big Data and artificial intelligence (AI) to analyze spending behavior, transaction history and assess credit scores in real time more accurately. At the same time, increase data sharing through the National Credit Information Center (CIC) to manage multi-institutional lending risks.

Second, banks need to optimize products, focusing on loan packages serving essential needs and social security (for example, social housing loan packages, education and health care loans) with substantially preferential interest rates, ensuring the safety of capital flows.

In addition, it is necessary to focus on improving the quality of customer service and information transparency to build long-term trust, minimize black credit and potential risks. Finally, implementing social responsibility is essential, through responsible debt restructuring for customers facing temporary difficulties and ensuring absolute transparency on interest rates and fees to build long-term consumer trust in formal credit.

Source: https://thoibaonganhang.vn/tin-dung-tieu-dung-tang-toc-dong-luc-tu-vi-mo-va-bai-toan-quan-tri-rui-ro-174788.html