Vietnam’s credit growth to accelerate in 2024

Credit growth target of 14%

According to the latest published data from the State Bank, credit growth for the entire economy is estimated to reach 13.7% in 2023. Right from the beginning of 2024, the State Bank has granted the entire limit to banks and set a credit growth target of 14 - 15%.

In a recent report, BIDV Securities (BSC) expected that credit growth in 2024 could reach about 14%. The driving force will come from areas related to exports, public investment, real estate business, etc. However, the analysis team sees risks from the economy recovering more slowly than expected, thereby causing credit demand (especially from consumers) may be pent-up in the second half of the year.

According to BSC, the recovery of liquidity in the real estate market should be monitored when outstanding real estate debt currently accounts for more than 21% of the total outstanding debt in the economy (of which 64% is for consumption purposes and 36% is for business purpose), which will determine the recovery speed of credit demand.

In fact, real estate consumer credit showed signs of bottoming out in September 2023 and rebounding in October 2023, while preferential interest rates for home loans are continuing their downward trend and gradually return to normalization.

The analysis team also expects that legal issues will gradually be resolved through amendments to the Land Law effective from January 1, 2025, which will help the real estate market begin to become vibrant again from the second half of the year. This will help credit growth really improve this year.

Previously, on February 7, 2024, the State Bank sent an official dispatch to credit institutions and foreign bank branches to promote credit growth in 2024.

Specifically, the official dispatch stated that on December 31, 2023, the State Bank of Vietnam announced and assigned a credit growth target of about 15% in 2024 to credit institutions so that credit institutions can proactively and drastically increase credit growth and implement solutions to meet the capital needs of businesses and people, contributing to supporting economic growth.

However, credit growth in early 2024 is quite low compared to recent years. Therefore, the State Bank requires credit institutions to promote credit growth solutions from the first months of 2024 according to the proposed tasks and solutions.

Specifically, the State Bank requested credit institutions to drastically implement correct and targeted credit growth solutions right from the beginning of the year, promptly meeting the credit capital needs of the economy.

At the same time, credit institutions need to strengthen review and simplify credit granting processes and procedures, optimize the application of digital transformation to the credit granting process, and reduce costs to reduce lending interest rates; create favorable conditions for people and businesses to access bank credit, especially through digitalized sales channels, products, and services.

Source: vietnambiz

Compiled by VBI