Vietnam’s credit growth projected to reach 10-year low of 13.2% in 2019

The slow growth comes mainly from state-owned banks, which have become more stringent on their loan disbursements.

Based on the current pace and credit growth of commercial banks, Vietnam’s credit growth is projected to reach 13.2% this year, lower than the 14% target. If this is the case, that will be the lowest credit growth in the last decade, according to Viet Dragon Securities Company (VDSC).

As of the end of September 2019, credit grew 9% year-to-date, below the 10.3% growth recorded in the first nine months in 2018. That means there is room for a further 5% expansion in the last quarter.

The slow growth comes mainly from state-owned banks, including Bank for Investment and Development of Vietnam (BIDV), Vietnam Bank for Industry and Trade (VietinBank) and Vietnam Bank for Agriculture & Rural Development (Agribank), which have become more stringent on their loan disbursements.

Commercial banks continued to extend loans at satisfactory levels. “This begs the question: will the State Bank of Vietnam (SBV), Vietnam’s central bank, redistribute the cap on credit growth among lenders to reach the initial target of 14%?” stated VDCS.

Commercial banks such as Vietnam International Bank (VIB), TienPhong Bank, Vietnam Prosperity Bank (VP Bank), and Military Bank (MB Bank) recorded fast growth of credit and closely reached the limit set by the SBV.

Meanwhile, BIDV and Vietinbank’s credit grew 8.6 and 3.2% year-to-date, below the allowed marks of 12% and 7% year-to-date, respectively.

Since the beginning of the year, the SBV declared that any bank, who meets the requirement of Basel II, can be considered for larger credit room. As of mid-2019, many commercial banks have met the requirements.

 

Interestingly, the gap between credit growth and nominal GDP growth has been shrinking over the years.

Currently, the gap between 12-month credit growth and nominal GDP growth is at 5%, well below the range of 7-11% in 2015-2017.

In 2018, the gap had narrowed to 3% due to global downside risks and a sudden tightening of credit policy starting in the third quarter of that year.

Currently, the environment is favorable to the SBV’s consideration of redistribution of credit growth cap as both the domestic and international situation are improving.

“We note that some commercial banks are asking for larger room,” added VDSC. Hanoitimes

Hai Yen

Vietnam among top 25 global performers in credit access: WB

Vietnam among top 25 global performers in credit access: WB

Vietnam has made considerable progress in terms of providing access to credit to become one of the top 25 global performers, according to the newly-released Doing Business Report 2020 produced by the World Bank.

Credit slowdown causes concern about access to bank loans

Credit slowdown causes concern about access to bank loans

Vietnam’s credit growth is slowing and can fall behind the central bank’s target of 14 percent for 2019, causing concerns that it could make it difficult for businesses to access bank loans during the remaining months of the year.

 
 

Other News

.
Hanoi hands out red books to foreigners
Hanoi hands out red books to foreigners
BUSINESSicon  18/02/2020 

Six foreign organisations and 35 foreigners were granted red books to purchase a number of apartments in Hanoi.

HSBC signals mass job cuts as profits plunge
HSBC signals mass job cuts as profits plunge
BUSINESSicon  18/02/2020 

Interim chief executive Noel Quinn reveals extensive job cuts and restructuring to shake up the bank.

Coronavirus triggers boom in private jet inquiries
Coronavirus triggers boom in private jet inquiries
BUSINESSicon  18/02/2020 

Private jet firms have seen a huge rise in people hoping to hire planes but they can't meet demand.

Global epidemic a blow to regional supply chains
Global epidemic a blow to regional supply chains
BUSINESSicon  18/02/2020 

The recent coronavirus outbreak has affected economies throughout the world, disrupting supply chains in the region, including in Vietnam.

Material autonomy key for Vietnam to fully exploiting EVFTA
Material autonomy key for Vietnam to fully exploiting EVFTA
BUSINESSicon  18/02/2020 

Textile stocks have been on an temporary upswing thanks to the recent ratification of the EVFTA but textile enterprises still face difficulties due to heavy dependence on imported raw materials and reduced demand worldwide.

COVID-19 highlights need for economic restructuring
COVID-19 highlights need for economic restructuring
BUSINESSicon  18/02/2020 

The respiratory epidemic caused by the novel coronavirus (COVID-19) has highlighted an urgent need for Vietnam to boost its economic restructuring and diversify its markets.

Vietnam’s logistics wins in US-China trade war
Vietnam’s logistics wins in US-China trade war
BUSINESSicon  18/02/2020 

Falling one place to 11th in the global index of emerging logistics markets, Viet Nam was still seen as a clear winner in the US-China trade war.

BUSINESS NEWS HEADLINES FEB.18
BUSINESS NEWS HEADLINES FEB.18
BUSINESSicon  18/02/2020 

Vietnam’s tourism sector counts cost of coronavirus

76 percent of German companies concerned about conoravirus impacts
76 percent of German companies concerned about conoravirus impacts
BUSINESSicon  18/02/2020 

Around 76 percent of German companies confirmed that the coronavirus epidemic affected their activities in Vietnam, according to a flash survey conducted by GIZ/AHK Vietnam.

Education draws foreign investment
Education draws foreign investment
BUSINESSicon  18/02/2020 

As of 2019, Vietnam counted five foreign invested universities, 68 private schools and 170 public ones.

Covid-19 crisis challenges banks
Covid-19 crisis challenges banks
BUSINESSicon  18/02/2020 

Some commercial banks have announced lower lending interest rates to help their clients overcome the difficulties caused by coronavirus (Covid-19) crisis.

Vietnam’s economy in ‘coronavirus whirlwind’
Vietnam’s economy in ‘coronavirus whirlwind’
BUSINESSicon  18/02/2020 

The Ministry of Planning and Investment (MPI) has predicted that the GDP would grow by 5.96 percent, a 7-year low.

Vietnam’s aviation sector loses $435 million amid Covid-19 epidemic
Vietnam’s aviation sector loses $435 million amid Covid-19 epidemic
BUSINESSicon  18/02/2020 

The initial loss caused by the suspension of flights to and from China for Vietnam’s airlines could be up to VND10 trillion.

2019-nCoV impacts on economies of Vietnam and China
2019-nCoV impacts on economies of Vietnam and China
BUSINESSicon  17/02/2020 

The service sectors of China as well as of Vietnam—including transport, accommodation, tourism, retail, hospitality and entertainment—will be hardest hit by the 2019-nCoV outbreak.

Vietnam's aviation industry expands market to maintain growth
Vietnam's aviation industry expands market to maintain growth
BUSINESSicon  18/02/2020 

The novel coronavirus epidemic has affected the socio-economic development of Vietnam, including the transport sector.

Property developers race towards digital technology
Property developers race towards digital technology
BUSINESSicon  17/02/2020 

Amid the fourth industrial revolution (Industry 4.0) many property developers in Vietnam are seeking to adopt digital technology both for enterprise management and in their projects.

Japan's economy shrinks at fastest rate since 2014
Japan's economy shrinks at fastest rate since 2014
BUSINESSicon  17/02/2020 

The world's third largest economy was hit by a sales tax rise, a destructive typhoon and weak global demand.

VN firms seek new raw material sources
VN firms seek new raw material sources
BUSINESSicon  17/02/2020 

Vietnamese companies, many of whom are facing a shortage of feedstock and raw materials as a result of the new coronavirus (COVID-19) outbreak in China, have started looking at alternative sources.

Coronavirus causes transport companies losses
Coronavirus causes transport companies losses
BUSINESSicon  17/02/2020 

Transport companies have been hit hard by the novel coronavirus (COVID-19).

Vietnam needs to find new rice markets to replace China: experts
Vietnam needs to find new rice markets to replace China: experts
BUSINESSicon  17/02/2020 

Since the novel coronavirus (Covid-2019) epidemic will surely affect exports to China, diversifying markets is an urgent requirement for Vietnamese rice exporters, experts have said.

 
 
 
Leave your comment on an article

OR QUICK LOGIN