The State Bank of Vietnam (SBV)’s headquarters in Hà Nội. The SBV will take the initiative in increasing credit growth quotas for banks so they don’t need to ask the SBV for the adjustment. Photo sbv.gov.vn

HÀ NỘI — The State Bank of Vietnam (SBV) will adjust up the credit growth quota for banks that gained high credit growth in the first eleven months of this year and used most of the quota allocated by the SBV.

The SBV this week sent an official dispatch to 28 commercial banks on the issue of low credit growth at the end of the year due to difficulties in the country’s economic growth recovery and capital absorption capacity.

According to the SBV, capital and credit demand of the economy has been weak. By the end of November 22, 2023, credit growth of the entire banking system reached only 8.21 per cent, far lower than both the 14-15 per cent target set at the beginning of the year, and the 14.5 per cent credit growth rate that the SBV allocated to commercial banks.

Meanwhile, the credit growth rate of commercial banks was quite different. While some banks in the first eleven months of this year gained higher growth rates than the average rising rate of the whole banking system, others reported low rising rates, or even suffered a decrease.

Therefore, in order to flexibly manage credit growth targets to meet capital demand for the country’s economic growth, the SBV will adjust credit growth quotas for banks to gain harmony. The adjustment will be made publicly and transparently according to specific principles and criteria.

Accordingly, banks whose outstanding loans have so far reached 80 per cent of the SBV’s allocated credit growth quota will be proactively given a higher credit growth quota based on the SBV’s 2022 ranking. Priority will be given to banks that focused credit on the Government's priority areas and lowered lending interest rates to low levels recently.

"The SBV will take the initiative in increasing the credit growth quota for banks so they don’t need to ask the SBV for the adjustment,” the SBV noted in the dispatch.

Under the current regulation, the SBV’s granting of a credit growth quota for each bank is based on a number of criteria, such as the bank’s rating results, the bank’s proportion of outstanding loans to the 100 largest customers, and the bank’s interest rates.

The SBV has applied the policy of granting a credit growth quota for each bank since 2011 with an aim to avoid overheated credit growth. Every year, the SBV usually considers granting the first credit growth limit to banks in the first quarter of the year and then will make adjustments to match the Government’s targets.

Under the new dispatch, the SBV has also required banks to provide safe and healthy credit, and ensure credit growth in accordance with risk management capacity and capital raising ability.

The SBV has also directed banks to support firms by continually maintaining stable deposit interest rates and actively reducing lending interest rates. Banks should direct credit to production and business sectors, as well as the Government’s priority sectors.

The SBV said that until the end of this year, it will continue to closely monitor market developments to readily take timely and appropriate management solutions. It will also proactively adjust credit growth quotas and be ready to support liquidity with an aim to create good conditions for banks in providing credit for the economy. — VNS