Vietnam’s credit growth slow, credit in high-risk sectors under control: central bank
BORROWING in Vietnam’s high-risk sectors remained under control, while credit growth was less than expected, despite banks’ abundant liquidity, a deputy governor of the central bank said on Wednesday (Jun 21).
Credit growth as at Jun 15 was seen at 3.36 per cent against the end of 2022, and was much lower than at the same period last year, Dao Minh Tu said at a quarterly news conference.
The State Bank of Vietnam (SBV) lowered key interest rates on Monday for a fourth time this year, in an effort to boost growth as the manufacturing-led economy weakens amid softening global demand.
The refinance rate was cut to 4.5 per cent, the discount rate to 3.0 per cent and the electronic interbank rate to 5.0 per cent – all were reduced by 50 basis points (bps).
“There are multiple reasons for the slower credit growth, especially faded demand to expand business and weak spending by borrowers,” Tu told reporters.
“We definitely want a higher credit growth, but not by lowering the standards to pump out credit uncontrollably and unhealthily,” he said, adding that banks had abundant liquidity.
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The SBV has targeted credit growth at 14 per cent to 15 per cent for this year.
Tu said credit for risky sectors was well-managed, but noted that the country’s corporate bond and stock markets were facing difficulties that have posed challenges for regulators.
Inflation in Vietnam remains under 4 per cent, and the SBV continues to buy foreign currency to strengthen its own reserves, he added, without elaborating. Vietnam’s consumer prices in the first five months rose 3.55 per cent from a year earlier. The government is targeting average inflation of 4.5 per cent for the year.
“Eyeing the end of this year, SBV’s policies will remain cautious and flexible,” Tu said, adding that stabilising interest rates and inflation remained the main goals.
SBV last week delivered its latest round of interest-rate cuts this year, in an effort to boost growth as the manufacturing-led economy weakens amid softening global demand.
Vietnam targets economic growth of 6.5 per cent this year, slower than an expansion of 8.02 per cent last year.
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