HÀ NỘI – Credit should grow faster in the last quarter so that growth target of 18-20 per cent set for the year can be reached, National Financial Supervisory Commission (NFSC) experts suggested.

In its latest report, the commission said that in the first eight months of the year, credit rose by 10.2 per cent compared with the end of 2015 to reach VNĐ4.9 quadrillion (US$219.7 billion). Of the total, outstanding loans contributed 90 per cent and corporate bonds added 10 per cent.

In terms of credit structure, lending in Vietnamese đồng accounted for 91.2 per cent of the total credit, while medium and long-term credit made up 55.9 per cent. However, the growth pace of medium and long-term loans witnessed a slowdown. From January to August, loans increased by 11 per cent, 7.7 percentage points lower than the same period last year.

The report also revealed that the proportion of credit contribution was little changed from the end of 2015. Loans for real estate investment and business increased by 5.4 per cent, accounting for 8.5 per cent of total credit in the first eight months of the year, while they made up 8.9 per cent for the entire previous year.

Meanwhile, consumer credit increased by 28.7 per cent compared with the end of 2015, accounting for 11.3 per cent of total credit (9.7 per cent in 2015). Consumer credit focused primarily on home repairs, purchase of houses, equipment and utensils, and transportation.

Outstanding loans to other activities and the services industry accounted for the largest credit, at 36.6 per cent and 22.2 per cent respectively, followed by the trade sector and the agriculture, forestry and fisheries sector.

According to reports from the credit institution, the non-performing loan ratio is below three per cent. However, bad debt is distributed unevenly, concentrated in a number of credit institutions with weak financial capacity. The NFSC’s analysis said bad debt of 19 credit institutions accounted for 55.1 per cent of total NPL systems.

NFSC analysts said settlement of bad debts at credit institutions over the past years was slow due to the credit institutions’ limited ability in assessing risks, which led to inadequate provisions for loans, and due to difficulties in the sale of mortgaged assets.

According to the report, the liquidity of the banking sector has been kept stable. By the end of August, the funds mobilised from economic organisations and residents reached VNĐ5.8 quadrillion, up 11.4 per cent, 3.4 percentage point higher than the same period last year.

The deposits are estimated to increase by over 12 per cent by the end of September. The loan to deposit ratio averaged 84.7 per cent, nearly equal to the figure for the whole of 2015.

In early September, a number of commercial banks in the sector continued to increase long-term deposit rates by between 0.3 and 0.5 percentage points to attract customers and achieve business targets by the end of the quarter.

Meanwhile, on September 26, some large commercial banks reduced interest rates by 0.3 to 0.5 percentage points for short-term deposits and a number of state-owned banks also reduced lending rates for priority subjects until the end of 2016.

"Typically, in the last quarter, bank credit is often promoted to achieve annual targets. Reducing lending rates in the peak season is a positive signal," analysts said.

For the foreign exchange market, the report also said in the past nine months, this market is relatively stable. However, experts from the commission still emphasised the need to keep a close watch on the exchange rate in the remaining months as the FED will likely raise interest rates once this year and many major economies around the world continue to maintain easing measures, boosting money supply. – VNS