How to 'pump' more than 1 quadrillion VND into the economy?

Transaction at a bank in Ho Chi Minh City - Photo: QUANG DINH

Speaking with Tuoi Tre, experts noted that promoting credit growth to support economic growth must be reasonable, controlling inflation, and avoiding letting money flow "easily" into the asset market.

Waiting for businesses to increase loans

According to the latest report of VPBanks Securities, the credit growth of the entire Vietnamese banking industry as of August 26 reached 6.63%. With the target of 15% growth for the whole year, the banking industry needs to increase credit by 8.37%, equivalent to more than 1.13 quadrillion VND, in the last 4 months of the year.

Ms. Le Thu Uyen, VPBanks analyst, said that the State Bank of Vietnam (SBV) has expanded credit room for banks that achieve 80% or more of their assigned quota, based on their rating scores. This policy will promote competition among banks in gaining credit room and market share, leading to a trend of more preferential interest rates, which is beneficial to borrowers.

Mr. Le Hoai An, banking expert and founder of Integrated Financial Solutions Joint Stock Company, pointed out that credit growth in the last quarter mainly came from listed commercial banks, especially the group specializing in lending to businesses.

According to data from Wigroup, the listed commercial banking group accounts for about 80% of outstanding credit in the industry and grows by about 8%, while the unlisted group accounts for 20% of outstanding credit and only grows by 1-2%.

Mr. An emphasized that lending to the corporate segment is the main driver of credit growth in the context of weak consumer demand and slow personal credit growth. Banks with a high proportion of real estate and construction loans also showed outstanding growth compared to the industry average.

Mr. Nguyen Hung, general director of TPBank, noticed that credit demand is gradually increasing in the third quarter with more businesses interested in borrowing capital. He expects the bank to disburse all 16% of the assigned credit room this year.

Mr. Pham Nhu Anh, CEO of MBBank, said that as of August 28, the bank's credit growth had reached 10.44%. According to the State Bank of Vietnam's document adjusting the growth target, MBBank is expected to grow by an additional VND14,000 billion.

To promote credit, MBBank focuses on sectors that are driving forces of the economy such as exports, healthcare, education, electricity, renewable energy, and manufacturing and processing.

Is it necessary to reach 15%?

According to forecasts from some research units, credit growth of the entire Vietnamese banking sector in 2024 could reach 14%, assuming that banks can push 90% of their assigned credit room, the State Bank of Vietnam does not increase operating interest rates and GDP reaches over 6%. However, some experts still question whether it is worth trying to achieve the credit growth target of 15%.

A report from VPBanks shows that Vietnam's credit-to-GDP ratio is high compared to countries with similar incomes and approaching that of high-income countries.

This raises concerns about the ability to achieve the credit growth target of 14-15% this year, especially when considering risks to asset quality, inflationary pressures and the risk of bad debt.

Statistics from BIDV Training and Research Institute show that the proportion of credit capital flow has increased from 40.7% in 2019 to 53.5% in the first half of 2024. Meanwhile, capital mobilization channels through capital markets such as stocks and bonds tend to decline.

Associate Professor Dr. Nguyen Huu Huan, senior lecturer at the University of Economics, Ho Chi Minh City, said that the weakness of the capital market is due to the lack of confidence in the bond market. He also noted that the stock market is quite gloomy with a very limited number of listed companies.

To solve this problem, Mr. Huan proposed that there should be a solution to revive the capital market, especially developing the bond market with a scale and structure larger than credit. This is to meet the medium and long-term capital needs of enterprises and the economy. Developing the capital market will help reduce the burden on bank credit.

However, Mr. Huan also noted that promoting credit growth to support economic growth must be reasonable and not at all costs, especially to control inflation.

This expert warned against creating pressure on "pumping" credit so that money flows "easily" into the real estate market or other types of assets.

"Credit growth must ultimately serve economic growth and needs to be linked to actual borrowing needs such as production, business and consumption," said Mr. Huan.

Another economist also suggested that the State Bank of Vietnam should provide clearer guidance to banks on prioritizing asset quality and ensuring sustainable growth in outstanding loans. At the same time, it should encourage banks to allocate risks by avoiding concentrating credit on specific businesses.

The expert also noted that credit growth may be lower than the target of 15%, but if capital flows into production, business and people's consumption, it can still generate GDP growth exceeding 6%. It is important not to trade off the quality of growth, especially in the context of bad debt tending to increase in the second quarter.

Many positive signals

Another bank leader said that the Fed's expected interest rate cut in September, along with the cooling trend of exchange rates, will create favorable conditions for Vietnam to maintain low interest rates, stimulating growth in cheap loans.

When the USD depreciates, the world economy may recover, leading to increased export orders for Vietnam, thereby creating greater demand for credit for the import-export business sector.

This expectation is supported by data from Wigroup, showing that manufacturing sectors such as raw materials, consumer goods and industrials have borrowed nearly VND35,000 billion more in the past 8 months. The PMI index in August, although down from July, still reached 52.4 points with output and new orders continuing to increase significantly, showing a positive recovery in production and trade.

In addition, the real estate market is also showing clearer signs of recovery. These factors are considered important bases for promoting credit growth in the last months of 2024.

Source: https://tuoitre.vn/lam-sao-bom-hon-1-trieu-ti-dong-vao-nen-kinh-te-20240910231137907.htm