Why Banks Are Rushing to Inject Capital

Banks on the Hunt for Businesses

To boost credit growth, banks are proactively seeking businesses with viable projects to lend to. Notably, two banks are arranging a credit package of VND 6,750 billion for the expansion of the HCMC – Long Thanh Expressway, signed in late November.

Some private banks are adopting strategies to support immediate cash flow for small and medium-sized enterprises (SMEs) through card incentives, cashback, and reduced service fees. This approach not only aims to attract new customers but also prepares the groundwork for credit activities when needed.

To meet the capital needs for production, business, and personal purposes, one bank has launched a preferential loan package of VND 48,500 billion for individual customers until December 31. This package is allocated to individual customers and SMEs—two segments offering higher profit margins and better risk dispersion compared to large corporate clients.

The banks’ strategies reflect the reality of the SME segment, which, despite high capital demand, presents challenges in risk management and customer acquisition costs. This necessitates banks to integrate payment and credit products.

According to economist Nguyen Tri Hieu, the pressure to achieve year-end credit growth requires banks to balance two potentially conflicting goals. First, they must secure market share by offering incentives and streamlined processes to SMEs and export businesses. Simultaneously, they need to manage interest rate risks and funding costs amid increasing competition and rising deposit rates.

“For businesses, this is a clear and timely message to negotiate loan terms, but they must consider funding costs as lending rates may fluctuate due to liquidity pressures. For banks, the challenge is to selectively deploy capital, prioritizing efficient loans with strong collateral without compromising short-term liquidity,” said Mr. Hieu.

New Deal Involving 21 Banks

On December 12, the State Bank of Vietnam announced that, following government directives, commercial banks have allocated approximately VND 500,000 billion for the Credit Program for Strategic Infrastructure Investment in Electricity, Transportation, and Technology.

Currently, 21 commercial banks have registered to implement this program. Borrowers must be eligible under the program’s criteria and meet the lending conditions. They are also required to cooperate with the lending bank throughout the loan process. The lending mechanism follows existing regulations.

The program offers preferential interest rates at least 1-1.5% lower than the average lending rates for the same term offered by the participating banks.

The program will run until the end of 2030 or until the total loan disbursement reaches VND 500,000 billion, whichever comes first.

The preferential interest rate will apply for a minimum of 2 years from the disbursement date (as per each loan agreement) but will not exceed the loan term agreed upon with the borrower.