Central bank to prioritise credit for production, business in HCM City

HCM City (VNS/VNA) - The State Bank of Vietnam’s (SBV) Ho Chi Minh City branch will continue to prioritise credit for production and business, especially in priority sectors, to boost economic recovery.

Nguyen Duc Lenh, deputy director of the SBV’s HCM City branch, said the credit flow would be directed to priority sectors while credit quality would also be improved.

Priority fields include agriculture, rural areas, exports, small and medium-sized enterprises, supporting industries, high-tech enterprises, and others.

Credit institutions must also ensure stable liquidity, safe banking operations, and strictly control credit from potentially risky areas, according to Lenh.

Credit growth in the city has focused on production and business to support economic recovery, accounting for 60-70% of the total outstanding loans, said Lenh.

Last December, the SBV lifted the credit growth target by 1.5-2 percentage points for 2022 from its earlier target of 14%, allowing lenders to lend an additional 240 trillion VND (9.7 billion USD).

Interest rates remain high

Economist Le Xuan Nghia, a member of the National Financial and Monetary Policy Advisory Council, said interest rates are still too high, despite the central bank calling on banks to cut lending rates to support enterprises.

Deposit interest rates at banks have surged to as much as 12% per year, pushing lending interest rates up to 15-16% a year, he said.

If the inflation rate is around 4%, the savings interest rates should be around 6-7% per year, he added.

Experts have predicted the deposit interest rate will remain high at least until June and that deposit rates would peak in the first half of 2023 with an increase of 1-1.5 percentage points.

Recently, the Vietnam Banks Association called on commercial banks to keep deposit interest rates at 9.5% or below to reduce lending interest rates.

Commercial banks started lowering deposit interest rates early this month and cut further last week, raising hope of a drop in lending rates.

SBV Governor Nguyen Thi Hong has constantly called on banks to cut operating costs and improve administrative procedures so as to reduce lending interest rates.

Expert Can Van Luc said enterprises should look to other capital mobilisation channels instead of relying too much on bank loans./.