Total outstanding loans in Vietnam’s banking system to May 25 grew 6.53 per cent year-on-year, much higher than the 5 per cent and 4.5 per cent recorded in the same period of 2016 and 2015, respectively, according to the State Bank of Vietnam (SBV).
At a meeting in Hanoi on June 5 to announce the results of monetary policies and banking operations to date, SBV Deputy Governor Ms. Nguyen Thi Hong said that credit growth has contributed significantly to growth in domestic production and business.
Lending went to priority sectors during the period, including agriculture, exports, support industries, small and medium-sized enterprises (SMEs), and hi-tech businesses.
With fears of a bubble, credit growth in the January-May period in the real estate sector experienced a year-on-year slowdown, according to Ms. Hong, with the exact figure remaining unknown.
The foreign exchange market has become more complex due to a series of new policies from US President Donald Trump, she said, adding that the VND has devalued by more than 1 per cent against the US dollar this year.
“Lowering interest rates will remain a challenge for the central bank this year,” she told the meeting, saying that some commercial banks have increased interest rates on certificates of deposit and VND deposits already, mainly for terms of over 12 months.
There is the possibility that the central bank will boost credit growth to support economic growth this year, after GDP came up short in the first quarter, at 5.1 per cent; the slowest rate since the first quarter of 2014.
A recent Directive signed by Prime Minister Nguyen Xuan Phuc on June 2 tasks the SBV with achieving credit growth of more than 18 per cent this year by introducing suitable packages for housing and consumption lending.
A recent report from the Bao Viet Securities Company (BVSC) forecast a rise of 1 to 2 per cent in credit growth this year from the annual target of 17 to 18 per cent, based on a scenario whereby inflation stays under control over the remaining months of the year.
The consumer price index fell 0.53 per cent in May against April, a ten-year low, due to declines in foodstuff and other items, according to the General Statistics Office (GSO), which put year-on-year inflation at end-May at 3.19 per cent, a sharp fall from 4.3 per cent in April.
One of the biggest concerns regarding inflation this year is the impact of revised rates for medical services. BVSC believes, however, that a circular issued by the health and finance ministries at the end of May about increases will be the final adjustment this year.
BVSC has adjusted its year-on-year inflation forecast for the second quarter to 3 per cent, then 3.2 per cent for the third quarter and 3.5 per cent for the fourth quarter.