70th anniversary of Hanoi's Liberation Day Vietnam - Asia 2023 Smart City Summit Hanoi celebrates 15 years of administrative boundary adjustment 12th Vietnam-France decentrialized cooperation conference 31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Economy / Banking & Finance
Vietnam credit growth slows to 2.13% in 6-month period
Ngoc Thuy 10:41, 2020/06/17
Credit demand in Vietnam is expected to stay low in the foreseeable future as the Covid-19 pandemic continues to be complicated globally, said a central banker.

Vietnam’s credit growth as of June 16 is estimated at 2.13% against the end of last year, significantly lower than the average growth rate of the corresponding period in 2019 at 5.7%, according to the State Bank of Vietnam (SBV).

 SBV's Vice Govenor Nguyen Thi Hong expects credit growth to stay low due to Covid-19 impacts. Photo: SBV. 

Meanwhile, as of May 29, the growth rate of M2, which measures money supply that covers cash in circulation and all deposits, increased 3.4% against the end of 2019.

Regarding the credit structure, Nguyen Quoc Hung, director of the SBV’s Credit Department, said credit for agricultural production expanded 0.3% compared to end-2019; followed by that for exports (4.94%  versus 10% in the first six-month period of 2019); technology sector(2.92%); supporting industries (2.27%); and small and medium enterprises (-0.7%).

Hung added in the first month of the Covid-19 outbreak, nearly VND300 trillion (US$12.87 billion) in outstanding loans was affected by the pandemic, VND900 trillion (US$38.6 billion) in the next month and VND1-2,000 trillion (US$42.89 – 85.78 billion) in subsequent periods, causing a major impacts on banks’ operation.

SBV Vice Governor Nguyen Thi Hong said the banking system has been quick in providing support for customers, mainly in forms of debt restructuring or freezing and waiving debt payment.

As the Covid-19 pandemic remains complicated globally, Vietnamese enterprises would endure its impacts and thus demand for loans is set to stay weak in a foreseeable future, Hong added.

While the banks’ liquidity remain sufficient to meet customer demands, it does not mean lenders would relax its criteria for lending to result in higher credit growth, Hong stated.

To date, the SBV has slashed its policy rates twice by a combined of 100 – 150 basis points to support the country's economic recovery.

Accordingly, the refinancing interest rate now stands at 4.5% per annum, rediscount rate at 3%, overnight interest rate at 5.5% and interest rate via open market operations (OMO) at 3%. 

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

On May 7, the SBV  issued guidance for Vietnam Bank of Social Policies to provide loans at 0% interest rates with worth a total of VND16 trillion (US$686.42 million) for customers directly affected by the pandemic and businesses in paying salaries and wages for furloughed staffs.

Mobile payment surges

In spite of severe economic impacts of the Covid-19, the rate of cashless payments has been growing strongly in the first few months of 2020 compared to that of last year, Hong said.

In the first four months of 2020, domestic transactions via bank cards rose 26.2% in the number of transactions and 15.7% in value year-on-year; internet transactions rose 3.2% in number of payments and 45.7% in value while mobile payment surged 189% in number of transactions and 166.1% in value.

According to Hong, the banking system also waived a number of payment service fees worth a total of VND1 trillion (US$42.88 million).

TAG: Vietnam central bank credit growth SBV mobile payment cashless payment interest rates SME covid-19 coronavirus nCoV pandemic
Other news
16:31, 2024/02/15
Vietnam’s corporate bond market could grow to US$100bn: Finance Minister
The Ministry of Finance is expected to establish a separate bond market, strengthen inspection and auditing, and create conditions for businesses to raise capital.
20:08, 2024/02/14
Vietnam’s banking sector set to turn the corner in 2024
The fact that the Vietnamese dong depreciated by a modest 2.9% year on year in 2023 indicated high stability and improved foreign exchange reserves compared to the end of the previous year.
14:02, 2024/02/02
Vietnamese Gov’t remains steadfast in upgrading stock market to emerging status by 2025
The Ministry of Finance is expected to ease pre-transaction deposit requirements for foreign investors this year.
12:06, 2024/01/31
USD/VND exchange rate set to stabilize in second half of 2024
The central bank achieved some success in managing the foreign exchange market as the USD/VND exchange rate maintained a sliding rate of about 3.1% in 2023, despite some periods approaching the VND24,800 threshold.
11:04, 2024/01/22
Foreign capital expected to return to Vietnam’s stock market
If the stock market is upgraded to emerging status, the potential influx of foreign capital could range between $5 and $8 billion.
13:08, 2024/01/09
PM calls on banking sector to meet economy's capital needs
The main goal of the banking sector is to support economic growth while controlling inflation, contributing to the stability of the macro-economy, the monetary and foreign exchange markets, and financial security.