The State Bank of Vietnam (SBV) recently sent a document to credit institutions (CIs) to publicly and transparently announce the principles for assigning credit growth (TTTD) in 2025. In which, the expected TTTD of the whole system in 2025 is about 16%. Assessing this target, many economic experts said that this is an appropriate increase when in 2025, the Government set a GDP growth target of up to 8%.
In addition to announcing the TTTD level for the new year, the State Bank affirmed that it will continue to implement the roadmap to limit and gradually eliminate the allocation of TTTD targets for each credit institution according to Resolution No. 62/2022/QH15 dated June 16, 2022 of the National Assembly.
16% growth target
According to Dr. Nguyen Quoc Hung, Vice Chairman and General Secretary of the Vietnam Banks Association, in the third quarter of 2024, TTTD has had positive changes. It is estimated that TTTD will achieve the target of 14% by the end of the year in 2024.
By 2025, although the National Assembly has resolved to set an economic growth target of 6.5-7%, striving to reach 7-7.5%, the Government and the Prime Minister have resolutely and boldly set a growth target of more than 8%, or even higher, at double digits.
In line with the Resolution of the National Assembly, the direction of the Government and the Prime Minister, the SBV said that in 2025, it will continue to implement credit management solutions in line with macroeconomic developments to contribute to promoting economic growth and controlling inflation. In order to facilitate credit institutions to provide credit capital to meet economic growth needs, on December 30, 2024, the SBV sent a document to credit institutions to publicly and transparently announce the principles of credit transfer in 2025 for credit institutions to proactively implement.
Accordingly, the State Bank of Vietnam expects the total TTTD ratio of the whole system in 2025 to be about 16%. The assigned TTTD ratio of credit institutions is based on the results of the 2023 ranking score as prescribed in Circular 52/2018/TT-NHNN (amended and supplemented) multiplied by the coefficient applied to all banks.
With such targets, economic experts believe that the 16% growth target is likely to be achieved due to the increasingly better health of the economy, and the growth momentum in 2024 will be a great driving force for businesses.
Specifically, emphasizing that the driving force of TTTD in 2025 comes from the strong recovery of the economy, experts from MB Securities Joint Stock Company (MBS Research) analyzed: Credit activities in 2025 may be driven by a number of factors such as the strong recovery of the Vietnamese economy and the high disbursement rate of public investment.
"Both of these factors will be driven by the recovery of manufacturing and trade activities, thanks to increased domestic and foreign demand. This will allow the SBV to maintain its loose monetary policy in 2025. At the same time, the high disbursement rate of public investment will help create jobs and support credit demand, in line with Vietnam's economic recovery goals and the implementation of major infrastructure projects in the 2021-2025 period," MBS Research analysts affirmed.
Also with the macroeconomic context expected to improve in 2025, SSI Securities Corporation expects TTTD to reach 16% in 2025. Growth potential may come from the commercial technology, manufacturing and FDI companies. In addition, the recovery in credit demand is concentrated mainly in the construction and real estate sectors.
Sharing the above viewpoint, Director of Analysis of Dragon Capital Securities Joint Stock Company (VDSC) Nguyen Thi Phuong Lan said that in 2025, the short-term credit capital demand of listed enterprises will remain relatively positive, supported by the debt restructuring demand of real estate enterprises and the working capital demand of other manufacturing enterprises. In addition, the demand for medium and long-term credit capital is forecast to continue to increase thanks to the decrease in lending interest rates, creating conditions for enterprises to access investment capital to expand production.
In addition, market analysis companies believe that consumer credit demand will likely improve as the economy enters a new growth phase. Vietcombank Securities Company (VCBS) expects the driving force for consumer credit in 2025 to come from low interest rates, creating a driving force for capital demand; retail credit will accelerate with the driving force from business and consumer activities as well as home loans; wholesale credit will continue to remain stable.
Quality assurance, "straightening" capital flow
Although many economic experts expressed optimism about the target of TTTD in 2025 of about 16%, they also noted that the credit/GDP ratio has been increasing recently, which may lead to potential risks as some warnings from international organizations, especially in the context that commercial banks need to devote resources to quickly handle bad debts that have increased sharply in the past two years.
According to Dr. Chau Dinh Linh (Ho Chi Minh City Banking University), when credit growth increases, it will easily lead to a corresponding increase in bad debt ratio if credit risk is not well managed. This will create negative impacts in the future, slowing down GDP growth in the long term. Therefore, credit growth needs to go hand in hand with credit quality, and it is necessary to build an effective credit management risk control system. Along with that, it is necessary to ensure the efficiency of credit use, "direct" capital flows to priority areas, areas that promote GDP according to the Government's long-term strategic orientation, areas with strengths such as high-tech agriculture, etc.
FiinRatings General Director Nguyen Quang Thuan said that in 2025, the State Bank of Vietnam will continue to allow credit institutions to proactively adjust their outstanding loans based on credit ratings and monitor capital adequacy ratios without requesting approval from the management agency. This policy not only increases flexibility for credit institutions but also helps capital flow faster to necessary areas, promptly meeting the capital needs of businesses and people.
In addition to announcing the expected TTTD of the whole system in 2025, the SBV affirmed to continue implementing the roadmap to limit and gradually eliminate the management of TTTD allocation targets for each credit institution according to Resolution No. 62/2022/QH15 dated June 16, 2022 of the National Assembly.
Regarding this issue, Dr. Chau Dinh Linh acknowledged that the State Bank needs to have a roadmap and specific milestones for the story of moving towards eliminating the credit "room", and needs to clearly announce the policy to the banking system in a consistent and transparent manner; at the same time, it is recommended to increase the safety and stability of the existing banking system by classifying banking groups, moving towards resolving weak banks, specially controlled banks, and mandatory transfer of zero-dong banks so that banks can become better and stronger.
According to Permanent Deputy Governor of the State Bank of Vietnam Dao Minh Tu, in 2025, the State Bank of Vietnam will closely monitor developments and actual situations to manage the credit market of the banking system proactively, flexibly, promptly, effectively, scientifically, closely following the situation so that the credit institution system can provide enough credit capital to serve the economy and ensure system safety, in conjunction with prioritizing promoting economic growth, stabilizing the macro economy, and controlling inflation.
"The State Bank will proactively adjust credit growth targets to create conditions for credit institutions to provide sufficient and timely credit capital for the economy without requiring a written request from credit institutions," Deputy Governor Dao Minh Tu emphasized.
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