Vietnam’s credit growth in the first two months of this year expanded by just 0.77 percent against the end of 2018, the lowest level in the past few years, a report from the Ministry of Planning and Investment (MPI) showed.
Hanoi (VNS/VNA) – Vietnam’s credit growth in the firsttwo months of this year expanded by just 0.77 percent against the end of 2018,the lowest level in the past few years, a report from the Ministry of Planningand Investment (MPI) showed.
The rise in the same period in 2018 and 2017 was nearly 2 percent.
During the two-month period, mobilised capital rose by 1 percent, with interestrates tending to rise in the few weeks before the Lunar New Year and drop afterthe country’s largest holiday, according to the report.
Interest rates for dong deposits averaged at 4.5-5.5 percent per year for termsof less than 6 months, 5.5-6.5 percent per year for terms of 6 to 12 months and6.6-7.3 percent per year for 12-13 months.
The rates were at some 6-9 percent for short-term loans and 9.0-11 percent formedium- and long-term loans.
In a move to boost economic growth, Prime Minister Nguyen Xuan Phuc recently askedthe State Bank of Vietnam to boost credit in the Government’s priority areas,including agriculture businesses, firms producing goods for export, small- andmedium-sized enterprises, enterprises operating in auxiliary industries andhigh-tech enterprises including start-ups, so that experts believe the creditgrowth would expand at a faster rate in the coming months.
The Government set a credit growth target of 14 percent this year, which bothdomestic and foreign experts believe to be reasonable. The rising rate was thesame as last year when it saw the lowest growth rate since 2014.
Moody’s Investors Service has so far also hailed the moderation in Vietnamesebanks’ credit growth, saying it was positive for their asset quality andcapitalisation.
According to Moody’s, tighter credit can lead to rising problems for loanratios, reflecting the seasoning of banks’ loan portfolios. However, lowercredit growth encourages banks to focus on borrowers of better quality, whichwill improve asset quality in the long term.
The moderation in credit growth will also lower pressure on capital, especiallyfor State-owned banks, the rating agency said in a recent report.-VNS/VNA
Vietnamese banks are forecast to gain in profitability this year, but raising capital will be a key focus for banks to meet the State Bank of Vietnam’s strict Basel II requirements.
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Illustrative image (Photo: VNA) 
