Strategic plans in need for credit limits
Strategic plans in need for credit limits
Abolishing the credit growth limits in Vietnam could necessitate a strategic roadmap and the development of effective alternative tools to ensure financial stability and progress, some analysts have said.
November witnessed a modest decrease in the interest rates for capital mobilisation in Vietnam, predominantly ranging 0.2-0.4 per cent per annum across most terms in both state-owned and joint-stock commercial banks.
For instance, state-owned Vietcombank adjusted its rates twice within the month, culminating in a reduction of approximately 0.3-0.4 per cent per annum. This brought the 12-month term rate down to a record low of 4.8 per cent per annum - approximately 0.5-0.6 per cent lower than its counterparts.
In the joint-stock banking sector, similar trends were observed. Most banks reduced their rates by around 0.1-0.4 per cent per annum.
Sacombank, notably, made a significant cut of 0.6 per cent per annum for terms extending beyond 12 months, aligning its rate with Vietcombank at 4.8 per cent per annum. Consequently, the average 12-month mobilisation rate has seen a significant decrease, resting 4.3-4.5 per cent per annum, a stark contrast to the rates at the start of the year.
A senior BIDV executive explained, “The downtrend in the VND capital mobilisation interest rates is supported by the State Bank of Vietnam’s (SBV) loose monetary policy, set against the backdrop of easing exchange rate pressures and controlled inflation. In fact, the new loan interest rates have returned to pre-pandemic levels, which is a significant achievement for the nation’s banking sector.”
Despite the sharp decline in interest rates, credit growth has accelerated compared to the previous month but has not seen a breakthrough when compared to the same period last year or in terms of capital mobilisation growth.
“The 9.15 per cent credit growth indicates that banks continue to finance the economy, predominantly through short-term lending, with normal capital turnover. This underscores the challenges in medium and long-term lending, largely due to external factors,” said Nguyen Thi Hong, Governor of the SBV.
In a recent meeting, Hong revealed that the SBV is reviewing and amending legal documents, emphasising the need to manage various risks tightly while easing difficulties. The SBV is also evaluating the overall process of managing credit growth limits, and currently considering whether to maintain or adjust them.
