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On November 28, the State Bank of Vietnam (SBV) announced an adjustment to increase the credit growth target for 2024 for credit institutions (CIs), following a specific principle to ensure transparency and fairness. The addition of this limit is a proactive move by the SBV, and CIs do not need to make a request for it.
According to the SBV, this adjustment is made possible by the effective control of inflation, which remains below the target set by the National Assembly and the Government. It also aligns with the Government and Prime Minister’s directives on flexible, efficient, and timely credit institution management to meet the capital needs of the economy and support production and business activities.
Moving forward, the SBV will continue to closely monitor domestic and international market developments. They are prepared to provide liquidity support to enable CIs to extend credit to the economy and will promptly implement appropriate monetary policy measures.
In a document sent to commercial banks, the SBV stated that CIs with a credit growth rate of at least 80% of the previously announced target can proactively adjust their credit balances following this principle: Additional credit balance compared to the previously announced SBV target = Credit balance as of December 31, 2023 x 2023 Ranking Points x 0.5%.
While the SBV did not disclose the list of institutions eligible for this credit limit increase, several banks had previously expressed their desire for such an adjustment.
At the Regular Government Meeting with joint-stock commercial banks on September 21, HDBank Chairman Kim Byoungho shared that their credit growth had surpassed 15% at that point. To further boost credit, HDBank requested that the SBV consider allocating additional targets to credit institutions with strong capital allocation capabilities, based on a balanced approach to their operational objectives, and continue to review the situation in the fourth quarter.
At the same event, LPBank General Director Ho Nam Tien shared that their credit growth had reached 15.97% (with an additional balance of nearly VND 44 trillion), the highest figure announced in the system at that time.
During an investor meeting in Q3 2024, Nam A Bank’s leadership revealed that their credit growth had climbed to 14% by the end of August, equivalent to utilizing 85% of the quota allocated by the SBV. They anticipated a further increase in this limit.
Recently published financial reports also showed that several banks had achieved much higher loan growth rates than the industry average in the first nine months of the year: Techcombank (20.8%), LPBank (16.1%), HDBank (16.1%), Nam A Bank (15.8%), MB (14.9%), TPBank (14.4%), MSB (14.4%), ACB (13.8%), and VPBank (12.2%). Therefore, these banks are likely to be among those receiving an increased credit quota.
Earlier this year, the SBV allocated the entire credit growth target for 2024 to CIs, corresponding to an approximate 15% overall growth rate. This approach differed from previous years, where the SBV would divide the quota into multiple installments and require banks to submit requests for limit increases.
According to the SBV leadership, this change conveyed a message to banks that capital injection into the economy this year must be more robust, decisive, and responsible.
“If, in previous years, we considered these as allocations or distributions, now it is a mechanism to encourage banks to strive to achieve their targets,” emphasized Deputy Governor Dao Minh Tu at a press conference at the beginning of 2024. “Because last year, while some banks fully utilized their quota, many others did not even come close, and some even had negative credit growth. These banks with low or negative growth may have been hesitant to extend credit. Therefore, by changing the mechanism, we want to motivate them to work towards achieving the assigned credit targets.”
On August 28, the SBV announced an adjustment to increase the credit growth target for banks with a credit growth rate of at least 80% of the target announced at the beginning of 2024.
Thus, since the beginning of the year, the SBV has made two adjustments to increase the credit limit for banks with high credit growth rates. Conversely, banks with slower credit growth rates are likely to face a reduction in their limits.
Speaking at a regular press conference earlier this year, Deputy Governor Dao Minh Tu stated that banks unable to extend loans would have their credit limits transferred to other banks.
“We will take firm action regarding banks with low credit growth rates, especially given that the SBV has allocated the full credit limit to commercial banks from the beginning of the year,” Mr. Tu said at the conference.
According to Mr. Tu, the SBV “will transfer the targets of banks with low credit growth to proactively create favorable conditions for banks with potential for credit development in the coming time.”
With the banking sector’s plan to achieve a 15% credit growth rate for the entire year, the system will need to inject more than VND 2 million billion into the economy in 2024. As of November 22, 2024, system-wide credit growth reached 11.12% compared to the end of 2023. This leaves a credit growth margin of approximately VND 520 trillion for the banking system in the last six weeks of 2024.
