Vietnam central bank cuts credit growth target to 15% this year

[HANOI] Vietnam’s central bank has cut its target for credit growth to around 15 per cent this year, it said over the weekend.

The move comes after last year’s fast credit growth of about 20 per cent, backed by authorities to support economic growth, raised red flags from economists, who have expressed concerns about the risks of asset price bubbles.

The bank “projects system-wide credit growth at approximately 15 per cent” this year, it said in a statement dated Jan 10.

The central bank’s projections are effectively instructions given to lenders, and are seen as both a target and a ceiling.

The new target is lower than the 16 per cent the bank initially set for 2025 before raising it during the year. It did not disclose the adjusted target for last year.

“In our view, the State Bank of Vietnam has tried to be receptive to market feedback,” said Willie Tanioto of Fitch Ratings, noting that the target may shift later in the year or may be scrapped.

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The central bank said that it had asked credit institutions to tighten controls over loans to risky sectors, including real estate.

The shares of several real estate companies fell on Thursday (Jan 8) amid rumours about the central bank signalling that it would tighten controls over lending to the real estate sector, stock traders said.

Shares of Vinhomes, Vietnam’s largest property firm, fell 6.96 per cent on Thursday before slightly recovering on Friday. REUTERS