Stepping up efforts to boost credit growth

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According to the State Bank of Vietnam (SBV), as of May 25 total means of payment jumped 5.28 per cent, bank deposits rose 4.2 per cent, but credit only went up 1.31 per cent, far below last year’s figure for the same period of 2.29 per cent.

“By mid-May we just managed to move our bank’s credit from shrinking to growing. Firms are reluctant to borrow despite lending rates easing significantly,” said one director of a joint stock commercial bank.

Head of the SBV’s Credit Department Nguyen Viet Manh said, “The State Bank has visited 40 localities to work with local agencies to help firms get out of the woods. But weak capital demand is still prevalent.”

To spur credit growth, the SBV has required banks and the SBV branch offices to boost lending through promoting networking programmes between businesses and banks.

A meeting between Hanoi city’s management, major firms and credit organisations just took place to promote the bank-business networking programme.

Specifically, five banks and several large businesses had joined the programme, which had a total committed capital of VND11 trillion ($523 million), according to SBV Hanoi branch director Nguyen Thi Mai Suong.

Earlier, the programme has been deployed in other locations in the country, and yielded encouraging results.

According to the SBV, despite modest growth, credit has been channeled into priority areas.

For example, by May 23, credit to agriculture and rural areas jumped 2.6 per cent, double the average of the banking sector, while that to export rose 5.9 per cent.

Specifically, credit to small and medium-size businesses, after many months sliding into the negative, has seen a modest 0.34 per cent expansion.

Head of the SBV’s Monetary Policy Department Nguyen Thi Hong said to unblock credit flows, authorities need to take a raft of consistent measures to support firms, such as removing obstacles to resolving distressed assets and guaranteeing firms that wish to take out loans.

“In the coming time the SBV will roll out diverse credit packages such as the VND10 trillion ($476 million) package for fishermen, the VND12 trillion ($571 million) package for coffee, or the credit programme linking project developers, contractors, building material suppliers and banks. These credit packages are expected to ameliorate the credit growth picture in the latter half of the year,” Hong said.