Hanoi (VNA) - As the economy recovers, many businesses are resuming production, driving a surge in credit demand. In response, the State Bank of Vietnam (SBV) has raised credit growth limits for banks. Additionally, it has urged credit institutions to further reduce interest rates to support business expansion in the final months of 2024 and early 2025.
Efforts to boost year-end credit growth
The SBV recently announced adjustments to increase credit growth limits for credit institutions in 2024, ensuring transparency and fairness in the process.
According to SBV leaders, the decision was made under controlled inflation and aligns with government directives to manage effective credit growth while meeting the economy’s capital needs.
This is not the first time the SBV has taken proactive measures to expand credit room. At the start of 2024, it allocated credit growth targets to all credit institutions. On August 28, it announced plans to increase credit room for institutions that had achieved at least 80% of their initial growth targets.
Associate Professor Dr. Dinh Trong Thinh emphasized that the SBV’s actions demonstrate its commitment to driving credit growth, supporting economic development, and addressing funding needs. Allowing well-performing banks to extend additional loans without requiring formal requests highlights the SBV's proactive approach to stimulating the economy.
Experts agree that this policy is crucial not only for providing abundant capital for economic activities but also for stabilising the monetary market. With inflation under control, this initiative is expected to boost production and business operations, contributing to Vietnam’s 2024 socioeconomic goals and preparing for 2025.
Associate Professor Dr. Nguyen Huu Huan of the University of Economics Ho Chi Minh City noted that expanding credit room at this time is essential to accelerating credit growth in the year’s final months. To meet the 15% system-wide credit growth target, the SBV must increase limits for banks that have already utilized their current credit room to maintain a steady flow of capital into the economy.
Is the 15% credit growth target achievable?
The SBV set a 15% credit growth target for 2024. As of November 22, system-wide credit growth had reached 11.12% compared to the end of 2023.
Nguyen Duc Thach Diem, Deputy Chairwoman and CEO of Sacombank, revealed that the bank has implemented measures to promote safe and efficient credit growth. These include strict cost controls and a 1.2% reduction in deposit rates since the beginning of the year, enabling lending rates to decrease by nearly 1.5%. Currently, Sacombank’s lending rates average 7.5% per year, with individual customer rates at 7.9% and business rates at 7%. Sacombank has accepted a reduction in profits to ease financial pressure on customers.
Analysts have positively assessed the SBV’s increasingly flexible and timely credit management, which ensures smooth capital flow into the economy.
Speaking at a recent National Assembly session, SBV Governor Nguyen Thi Hong expressed optimism, stating that economic drivers on both the supply and demand sides are improving and recovering. Credit growth typically accelerates toward the year’s end, making the 15% target for 2024 entirely achievable./.
