Credit surge, where does capital flow?

According to the State Bank of Vietnam (SBV), by the end of the second quarter, credit growth of the entire system reached 6%.

Credit had a breakthrough in June alone. According to data recorded at the end of May, the credit growth rate of the entire system only reached 3.43%. Thus, in just 1 month, 360,000 billion VND of credit was disbursed, raising the total credit to nearly 14.4 million billion VND.

This is an impressive breakthrough, raising expectations that the entire industry will achieve the credit growth target of 15% this year, especially when in the first two months of the year, credit recorded negative growth.

However, this growth rate makes public opinion inevitably raise questions related to credit quality.

Remember, at the press conference summarizing the work of the first 6 months of the year, Permanent Deputy Governor of the State Bank of Vietnam Dao Minh Tu said that due to the negative impacts of the COVID-19 pandemic, bad debt has been on the rise, with on-balance sheet bad debt at nearly 5%. Potential bad debt, on-balance sheet debt, and debt sold to VAMC reached about 6.9%.

The representative of the State Bank said that bad debt is a story of the economy, not due to the weakness of the banking sector.

"To resolve bad debt, both banks and customers must take responsibility for the debt. The State Bank will take measures to improve credit quality and ensure bad debt is controlled at a safe level," said the State Bank's Standing Deputy Governor.

From the banking perspective, according to the financial reports of 29 commercial banks by the end of the second quarter of 2024, the total outstanding credit balance reached more than 12.4 million billion VND. This figure increased by about 7.3% compared to the end of 2023.

According to expert Le Hoai An - CFA Founder IFSS and co-founder of WiResearch, 27 commercial banks are classified into 4 main groups based on the size of assets and customer base of the bank, including state-owned group, group of banks specializing in lending to businesses, group of banks specializing in lending to individuals and other groups.

Although the Big 4 banking group is still leading in customer lending, the credit growth rate is quite low, showing that this banking group is quite cautious in the first 6 months of the year.

Mr. An said, "The group of banks specializing in lending to businesses always has a more outstanding credit growth rate and becomes the main driving force for credit in the entire banking industry."

Banks lending to businesses with high credit growth rates such as LPBank, HDBank, Techcombank with increases of 15.2%, 13.3%, 14.16% respectively.

"Techcombank, although the proportion of real estate loans still accounts for nearly 34% of the portfolio, but in the context of the real estate market not fully recovering, the bank has diversified its outstanding loans to the industrial, science and technology and construction sectors, helping to maintain good growth.

HDBank has expanded its construction sector loans with a growth rate of 43.5% compared to the end of 2023, but the bank's main driving force comes from the wholesale and retail sector, with a high loan proportion and growth of nearly 28%.

For LPBank, 1/4 of the portfolio is for the wholesale industry with a growth rate of more than 25%, while the construction industry, accounting for nearly 15%, also shows a growth rate of 15.7% compared to the end of 2023" - expert Le Hoai An and colleagues stated.

Notably, according to experts, although personal loans are still facing difficulties this year, banks that favor personal loans such as ACB, VPBank, and TPBank still achieved positive credit growth by the end of the second quarter.

According to Mr. An, the reason is that these banks have shifted their lending structure, expanded lending to small and medium enterprises, and taken advantage of opportunities from the business market.

At the end of the second quarter, ABBank was the only unit that recorded negative credit growth. The loan balance decreased to more than VND91,000 billion, a decrease of 7.2% compared to the end of last year.

The flow of credit into production and business activities is a good thing. However, the credit growth target is still far from the target set by the State Bank for the whole year.

It is worth noting that by the end of July 2024, credit growth across the system had declined, compared to the end of 2023, the growth rate was 5.66%, equivalent to nearly 14.33 million billion VND.

Regarding the task of credit growth in the last 6 months of the year, the State Bank said that it will manage the growth of credit volume and structure reasonably, meeting the credit capital demand of the economy to contribute to controlling inflation and supporting economic growth.

The State Bank of Vietnam will continue to promote credit in key areas, which are the driving force of the economy. Continue to promote specific credit programs and policies; remove difficulties for businesses and people; at the same time, strictly control credit in areas with potential risks... Continue to review and perfect the legal framework to create favorable conditions for the supply and access to bank credit.

Source: https://laodong.vn/kinh-doanh/tin-dung-tang-dot-bien-von-chay-vao-dau-1378898.ldo