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Credit growth declines by 0.6% in first month of 2024

VIETNAM, February 20 - HÀ NỘI — After accelerating strongly in the last weeks of 2023, credit growth of the banking system in the first month this year decreased by 0.6 per cent against the end of 2023.

Director of the State Bank of Vietnam (SBV)’s Department of Credit for Economic Sectors Hà Thu Giang reported the news at a conference to boost credit held in Hà Nội on Tuesday.

According to Giang, credit increased sharply in the last weeks of 2023, of which credit in December alone rose by 4.56 per cent, equivalent to more than VNĐ540 trillion.

The SBV said it targets a credit growth of about 15 per cent in 2024, but the goal can be adjusted to make it suitable with the actual situation and the economic developments.

To boost credit growth, instead of only allocating a part of credit growth quota for banks at the beginning of the year as previously, the SBV this year has assigned the entire credit growth target of 15 per cent for banks in early January.

According to SBV’s Deputy Governor Đào Minh Tú, the allocation of the entire credit growth quota in the first month of this year is expected to boost aggregate demand and create favourable conditions for banks to provide capital to meet the needs of economic growth, as difficulties are forecast to continue in 2024.

General Director of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) Nguyễn Thanh Tùng said that the bank's credit growth by the end of January was VNĐ1.24 quadrillion, down 2.3 per cent over the same period.

The reason is that growth in both retail and wholesale credit is declining due to gloomy economic situation, difficulties in production and business, and people's income decreasing, he explained.

Tùng said that in the coming time, Vietcombank will continue to offer loans at interest rates lower than the general market level, to support businesses and people during the current difficult period.

On February 7, the SBV also sent an official dispatch to credit institutions stating that despite the application of supporting policies to boost credit from the beginning of the year, credit growth this year is still quite low compared to recent years.

To boost credit growth, the SBV requested credit institutions to drastically implement effective credit growth solutions right from the beginning of the year. Credit must focus on production, business and the Government’s priority sectors, as those are the country’s economic growth drivers. Banks also need to strictly control credit for potentially risky sectors to ensure safe and effective operations.

In a recent report, analysts from the Việt Dragon Securities (VDSC) predicted credit may decrease slightly or move sideways in the first months of 2024. The forecast is based on the data trend history of credit growth. According to VDSC's observations, credit growth often tended to increase strongly in the last months of a year.

Therefore, after the strong increase in the last two months of the fourth quarter of 2023, it cannot be ruled out that credit will decrease slightly or go sideways in the first months of 2024, VDSC’s analysts said, adding that the first months of a year are usually the low period of business activity. — VNS