Credit growth still low in first half of 2023: SBV

Total outstanding loans in the economy had reached some 12.32 quadrillion VND (over 523.9 billion USD) as of June 15. (Illustrative image: vneconomy.vn)

Hanoi (VNA) – Credit growthsince the start of 2023 remains low, Deputy Governor of the State Bank of Vietnam (SBV)Dao Minh Tu said, blaming that fact on both subjective and objective causes.

The SBV set this year’s credit growthtarget for banks at 11%, but total outstanding loans in the economy had reachedsome 12.32 quadrillion VND (over 523.9 billion USD) as of June 15, increasing3.36% from the end of 2022 – a relatively slow pace compared to previous years,Tu told a press briefing on June 21.

He pointed to both subjective andobjective causes, noting that businesses have been struggling with difficultiesdue to the shortages of orders, disrupted money flows, and big unsold inventory,which have forced lay-offs at some companies.

Besides, soaring material prices,declined purchasing power in both domestic and foreign markets, anddifficulties facing some sectors like real estate have added furthercomplications, he went on.

In the first half of 2023, the SBVhas reduced interest rates four straight times, by 0.5 - 2% per year. Ithas also continued to encourage credit institutions to minimise expenses tostabilise lending interest rates to aid businesses’ recovery and development.

The SBV's press briefing on June 21. (Photo: SBV)

Thanks to the measures taken so far,interest rates have basically become stable, with deposit and lending interestrates gradually reducing, Tu said, elaborating that deposit rates at commercialbanks currently stand at around 5.8% per year while lending rates for Vietnamese dong loans about 8.9% per year, down 1% per year from the end of 2022.

The SBV has governed credit in anappropriate manner to help control inflation and support economic growth. For 2023,given the economic growth target of about 6.5% and the inflation ceiling limit of4.5%, it aims at a credit growth rate of 14 - 15% which will also be aligned tothe reality.

The central bank also wants to seehigh credit growth, but this target should not be achieved by loweringstandards to pump money into the economy at all costs. Good credit growth needsto be accompanied by quality and effectiveness, which is a conundrum for theSBV, according to the Deputy Governor.

In the time ahead, the SBV will keepa close watch on the market, the domestic economy, and the global economy to flexiblytake measures to retain inflation, stabilise the macro-economy as well as themonetary and foreign exchange markets, and control credit growth in line withthe set orientations.

In addition, to improve people and businesses’ credit access and protect theirrights and legitimate interests, it will also step up connecting banks withcompanies, order credit institutions to facilitate customers’ credit access, diversifybanking products and services, and streamline lending procedures, he added./.

VNA