Top banks set for credit expansion as growth battle heats up

As of August 28, 2024, credit institutions that have achieved 80 per cent of their credit growth targets set by the State Bank of Vietnam at the start of the year are eligible to independently adjust their outstanding loans.

This adjustment will be based on the credit institution's rating, without the need for formal requests from the banks.

The State Bank has encouraged banks to prioritize asset quality and sustainable credit growth while maintaining stable deposit and lending interest rates. Additionally, the central bank has mandated that credit institutions strictly adhere to monetary, credit, and lending regulations to ensure business efficiency, system safety, and market stability.

VPBankS reported that four banks, including HDBank, Techcombank, LPBank and ACB, have reached approximately 80 per cent of their credit growth targets.

These banks are now eligible for an additional credit limit increase ranging from 2 to 2.5 per cent, which would bring their new credit limits to between 18 and 18.7 per cent.

VPBankS analysts believe that these policy adjustments will intensify competition among banks for credit limits and market share. Consequently, interest rate policies may become more favorable for borrowers, though this could slightly compress net interest margins.

As of August 26, 2024, overall credit growth across the banking system had reached 6.63 per cent compared to the end of 2023.

To meet the government’s target of 15 per cent for the year, an additional 8.37 per cent, equivalent to $45.43 billion, needs to be injected into the economy over the next four months.

VPBankS forecasts that if banks achieve 90 per cent of the assigned credit limits, the State Bank is unlikely to raise policy interest rates, and the economy could see a GDP growth rate of 6 per cent with overall credit growth approaching 14.83 per cent.

Previously, the State Bank noted that, as of August 26, credit growth across the system was only 6.63 per cent, significantly below the 15 per cent target set earlier in the year. Growth has been uneven, with some credit institutions experiencing low or even negative growth, while others have expanded near their assigned targets.

To follow through on the government’s directives for flexible and effective credit growth management, the State Bank will proactively adjust credit growth targets for credit institutions to meet the economy's capital needs while controlling inflation and maintaining macroeconomic stability.