The Power of Banking: Injecting a Massive 480,000 Billion Dong into the Economy in a Month

According to the State Bank of Vietnam, total credit outstanding to the economy as of the end of June increased by about 6% from the beginning of the year, reaching nearly VND 14.4 quadrillion. This figure somewhat achieves the target for credit growth set by the Prime Minister for the banking sector.

Specifically, in June alone, credit increased by 3.6%, equivalent to the economy absorbing VND 480 trillion, higher than the total amount absorbed in the first five months of the year.

The surge in credit growth in June was partly due to a record credit package of $1.8 billion from the “Big 3” banks: Vietcombank, BIDV, and VietinBank, for the Long Thanh International Airport construction project – Phase 1. This is the largest project financing in the banking industry, with Vietcombank alone contributing $1 billion.

Additionally, according to FiinRatings, a credit rating agency, the credit growth is also attributed to the increased demand for borrowing and bond issuance by enterprises in the latter half of the year.

The agency forecasts that borrowing demand in the second half will accelerate thanks to the recovery of the macro-economy. In the first half of the year, exports also rebounded thanks to the recovery of key markets. Meanwhile, the trade deficit in May, due to increased imports of raw materials, indicated a recovery in manufacturing sectors. This bodes well for enterprises’ capital absorption capacity, the report said.

At the same time, the manufacturing sector is showing signs of recovery, with the industrial production index for the past five months estimated to increase by 6.8% year-on-year, and the processing and manufacturing sector up by 7.3%.

The organization also assessed that credit growth for the real estate business sector is expected to recover as legal obstacles are gradually removed with the enforcement of new laws.