The State Bank of Vietnam (SBV) would loosen credit growth target for commercial banks in Vietnam to get the economy back on a solid footing.
|SBV to ease credit growth for commercial banks in Vietnam |
At a recent conference, SBV Governor Le Minh Hung said that the lacklustre economic outlook has impeded in credit demand, particularly in April in May. However, enterprises appetite for borrowing is bouncing back as their operations are returning to normal.
As of 29 June, credit growth reached 3.26 per cent – which is higher than the 1.13 per cent of March, 0.12 per cent of April, and 0.53 per cent of May.
Previously, the SBV issued Circular No.01/2020/TT-NHNN dated March 13 directing credit institutions and branches of foreign banks to restructure repayment schedules, waive and reduce interest and fees, and maintain debt classifications in order to support customers affected by the COVID-19 outbreak.
Governor Hung believed Circular 01 has paved the way for credit institutions offering favourable conditions to support businesses by restructuring loans, extending payment moratorium and addressing the difficulties arising from the pandemic.
As of June 22, the banking industry has successfully restructured repayment terms or issued moratoriums for approximately 260,000 customers with a loan balance of nearly VND180 trillion ($7.83 billion) as well as waive and reduce interest and fees for more than 421,000 customers with the loan balance of VND1.3 million trillion ($56.5 million).
Furthermore, lenders also dropped lending rates by 0.5-2.5 per cent to help troubled borrowers cope with financial hardships.
Experts believed the public health challenge is the biggest test for banks’ stability for more than a decade, while banks’ rate cuts will crimp profits on their bread-and-butter lending businesses.
Hence, from July, the SBV has adjusted credit growth in tandem with the balance of liquidity and favourable capital of the banking system to get the economy back on a solid footing
The central bank also applies credit easing policy for commercial banks, especially higher credit growth for some lenders whose ample financial buffers and higher customers’ lending demand.