In case the Covid-19 pandemic is contained and the rollout of vaccination programs remains effective, Vietnam’s credit growth may hit 14% year-on-year for 2021, exceeding the original target of 12%.

Transaction at a branch of Vietcombank in Hanoi. Photo: Cong Hung

This is among the three scenarios for credit growth set up by the State Bank of Vietnam (SBV).

In a less optimistic scenario when the pandemic would persist until June, along with social distancing measures in place and prolonged vaccination, the credit expansion is expected to be around 10-12%.

And for the last scenario with the pandemic staying serious until the end of the year, the credit growth may be in range of 7-8%.

Director of SBV’s Credit Department for Economic Sectors Nguyen Tuan Anh said as of March, credit growth reached by 2.3% against late 2020, significantly higher than the 1% rate recorded in the same period last year.

“Demand for credit may increase sharply since the second quarter, especially in fields of industrial production, exports, trade and tourism,” said Anh, adding this comes from strong recovery of growth driving forces such as domestic consumption, exports, FDI inflows and public investment.

KB Securities Vietnam (KBSV) in its latest report expected the credit growth to be around 12-14%, which came from strong economic recovery and current low-interest rate environment.

“Capital mobilization rate has reached its bottom in early 2021, and is on track to rise up in the second half of the year,” it added.

For greater efficiency in credit expansion, banking expert Nguyen Tri Hieu suggested more solutions are needed to stimulate credit demand, saying “many enterprises are not seeking loans at the moment.”

Meanwhile, banks should ensure customers to have financial capabilities to repay their debts, as this is a key step to maintain credit quality.