Vietnam’s credit growth as of December 21 is estimated at 10.14% against the end of last year and up 11.62% year-on-year.

Overview of the press conference.

Vice Governor of the State Bank of Vietnam (SBV) Dao Minh Tu revealed the data at central bank’s press briefing held today [December 24]. Last year, Vietnam's credit growth reached 13%, while the SBV set a target of 14% growth rate for this year.

Meanwhile, as of December 18, the growth rate of M2, which measures money supply that covers cash in circulation and all deposits, increased 12.83% against the end of 2019 and 14.62% year-on-year, noted Mr. Tu.

Since the beginning of the year, the SBV has cut its interest rate caps four times, the moves which have encouraged commercial banks to provide loans at lower interest rates, with the latest made on September 30 by slashing 0.5 percentage points to the refinancing interest rate, discount interest rate, overnight lending rate, and interest via open market operations (OMO). 

Accordingly, the refinancing interest rate is lowered from 4.5% per annum to 4%, rediscount rate from 3% to 2.5%, overnight interest rate from 5.5% to 5% and interest rate via OMO from 3% to 2.5%. 

The SBV also lowered the interest rate cap to 4% annually from 4.25% for deposits with maturities of one month to less than six months.

Credit institutions have so far restructured debt payment schedule for 270,000 customers affected by the pandemic with total outstanding loans worth VND355 trillion (US$15.37 billion), while the banking system has been quick in providing support for 590,000 customers, mainly in forms of debt restructuring or freezing and waiving debt payment with outstanding loans worth over VND1,000 trillion (US$43.31 billion).

Loans with preferential interest rates of 0.5-2.5% lower compared to the pre-Covid-19 period have also been offered to 390,000 customers worth VND2,300 trillion (US$99.6 billion) since January 23.

According to the SBV, the bad debt ratio as of late October exceeded 2%, but “this is inevitable given the severe economic impacts from the Covid-19 and customers’ debt repayment capabilities greatly affected as a result,” noted Mr. Tu.