The Rush for Banks to Push Capital into the Market

Vietnam’s central bank, the State Bank, released statistics revealing that as of mid-June this year, the credit growth of the credit institution system had only reached 3.79%. This figure falls short of the annual target of 15%.

Mr. Le Ngoc Lam, CEO of BIDV, shared that the bank’s credit growth as of June 17 was 4.7%, corresponding to outstanding loans of VND 1,870 trillion, an increase of VND 81 trillion compared to the end of 2023. In terms of disbursement, the figure stood at VND 3.4 quadrillion, with a capital turnover of 2.78 times.

BIDV’s credit growth was negative in January and February, turning positive in May. However, compared to the previous year, outstanding loans increased by 15.6%, which is not a small feat. Breaking it down by region, Hanoi saw a credit growth of 9.6%, Ho Chi Minh City 4.1%, and South Central Vietnam 6.3%. Other areas experienced low growth, with some even witnessing negative growth.

To boost credit growth, BIDV has introduced 16 credit packages worth VND 80-90 trillion, offering interest rates 0.5-2.5%/year lower than those for regular customers. Additionally, the bank has forgone VND 3.5 trillion in profits over the last six months to support its customers.

“While interest rates remain low, credit growth faces challenges. Banks are eager to lend and are even anxious, but capital absorption is weak, leading to slow credit growth,” said Mr. Lam. He attributed this to the post-COVID-19 difficulties faced by businesses, as evident from the rising number of enterprises withdrawing from the market or temporarily suspending their operations.

Going forward, BIDV will encourage its branches to actively promote credit growth in the last six months by organizing meetings, dialogues, and connections between enterprises and banks to identify and address challenges. The bank will also continue to implement credit packages and reduce interest rates to support credit growth in line with the programs and directives of the State Bank.

Mr. Pham Toan Vuong, CEO of Agribank, projected a 2.5% credit growth by the end of June and an 8.5% growth by the year’s end.

While Agribank’s credit growth is low, given the nature of its credit and customer base, this is still considered a positive result.

Moving forward, Agribank will vigorously implement solutions to promote safe and effective credit growth. The bank will focus its credit on areas that drive development, including exports, investments, and consumption. It will also continue to approach and invest in social housing projects and the agriculture and rural sectors (rice, forestry, and aquatic products).

“We will continue to implement preferential credit programs with suitable interest rate policies for each customer segment to support them through difficult times. We are committed to maintaining discipline in handling violations in the lending process,” asserted Mr. Vuong.

ABBANK’s representative shared that to boost credit, the bank has reviewed its customers. For good customers, the bank proactively increases their credit limits. For those with recovery potential, the bank restructures their loans as per regulations. Only for customers who cannot be restructured does the bank focus on debt recovery.

According to Governor Nguyen Thi Hong of the State Bank, the bank will promptly issue guiding documents for the Law on Credit Institutions 2024 to ensure its effectiveness from July 1. Additionally, the bank will review and amend legal documents to remove obstacles for the economy and enhance access to bank credit.

The Governor also emphasized the vigorous promotion of credit programs, such as the VND 120 trillion program for social housing development loans and the VND 30 trillion program for loans in the forestry and fisheries sectors.