Creativity in credit management

Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu said that at the beginning of this year, the SBV identified that easing access to credit as one of the key tasks of 2024.

Therefore, since early 2024, the SBV has assigned the total credit growth target of 15 percent to credit institutions. This is a new approach, demonstrating the proactiveness, determination and innovation of the SBV in the efforts to promote economic growth, enabling credit institutions to meet legitimate needs for capital, and promoting the total demand.

In 2024, capital injection into the economy became more favorable, with no congestions like in previous years - photo: Duy Minh

However, at the end of August, the credit growth among credit institutions was uneven, with some banks experiencing low or even negative growth, while others closely met the SBV’s target. Therefore, in order to implement the direction of the Government, the SBV proactively adjusted the credit growth target for the credit institutions.

Specifically, as from August 28, 2024, credit institutions that have reached 80 percent of the credit growth target for 2024, as set by the SBV, are allowed to increase their credit room based on their credit rating scores.

For the same reason, on November 28, 2024, the SBV continued to increase credit targets for qualified credit institutions, the second time in 2024, without awaiting proposals from the credit institutions. Thereby, credit growth has “harmonized” with the growth rate of the economy, closely linked to supporting business development and controlling inflation. As of December 7th, 2024, the credit growth rate reached 12.5 percent, surpassing the nine percent of the same period in 2023. “The total outstanding loans were about VND15.3 quadrillion while raised capital was about VND14.8 quadrillion, Tu added.

He affirmed that with the solutions and efforts of the entire banking sector, the credit growth target of 15 percent for 2024 is feasible.

Bank credit in 2025 will focus on production and business - photo: Mai Huong

2025 a favorable time to inject capital into the market

In addition to easing access to the capital, according to economic expert, Dr. Dinh The Hien, the outstanding success of the banking sector in 2024 is that the banking system still stands firm after the “shock” of the Saigon Joint Stock Commercial Bank (SCB). The bank’s restructuring took place smoothly without causing anxiety for lenders.

Also, management of deposits and loans is stable without high interest rates race like in 2023. Currently, the VND interest rate at five percent/year is reasonable, contributing to stabilizing the capital market.

Regarding forecasts about the banking industry in 2025, the expert said the developments in 2025 will be very different, with many positive signals from the Vietnamese economy when Foreign Direct Investment (FDI), exports, agriculture, and consumption are improving and recovering. The trade and service sector is expected to increase by 10 percent compared to 2024. The real estate sector is also aiming to increase value rather than waiting for price increases or speculation..., facilitating the banking sector to inject more capital into the market. “Bank credit in 2025 will focus on production and business, creating value. Even the sectors that have faced disadvantages, such as the fishery sector are also showing signs of recovery, and will attract credit flows,” Dr. Dinh The Hien commented.