Businesses struggle to absorb credit

Businesses struggle to absorb credit

In HCM City, banks are working directly with industry departments and enterprises to identify challenges and enhance access to financing, particularly in key sectors such as agriculture, social housing, high-quality rice production and coffee exports.

Workers at a textile factory in the southern province of Bình Dương. VNA/VNS Photo

Vietnamese banks have launched preferential loan packages early in 2025 to boost credit growth. However, in several regions, businesses' ability to absorb credit remains lower than the same period in 2024.

According to a recent report by MBS Securities, credit growth is forecast to reach 17-18 per cent in 2025, with retail lending expected to account for a larger share of total outstanding loans due to rising demand and a low base from the previous year.

To address credit absorption issues, banks have been actively engaging with local authorities and businesses. In HCM City, banks are working directly with industry departments and enterprises to identify challenges and enhance access to financing, particularly in key sectors such as agriculture, social housing, high-quality rice production and coffee exports.

This year, the bank-business connectivity programme will undergo changes. Instead of being led by district authorities as in previous years, credit institutions (CIs) will directly engage with businesses, particularly those in priority sectors driving economic growth.

Despite these efforts, major banks such as VietinBank and Agribank report that many businesses are still unable to absorb capital, even with access to low-interest loan programmes. In Phú Thọ, Vĩnh Phúc, Hà Giang, Tuyên Quang, Lào Cai and Yên Bái, for instance, VietinBank Deputy CEO Lê Duy Hải noted that credit absorption by businesses has not matched 2024 levels.

According to Trần Như Tùng, chairman of Thành Công Textile Investment & Trading JSC and deputy chairman of the Vietnam Textile and Apparel Association (VITAS), exports in 2024 reached US$44 billion, with a 10 per cent growth target set for 2025. Orders have shown modest growth in early 2025, but risks remain.

The US market, which accounts for 40 per cent of the country's textile exports, poses significant uncertainties, particularly regarding potential tariff adjustments under new US policies. Additionally, digital transformation and sustainability requirements are increasing financial pressures on textile firms.

“These trends demand substantial capital, yet businesses struggle to access preferential loans,” Tùng said. “No dedicated loan programmes exist to support the industry’s transition to greener and more digital operations.”

Policy outlook

To support the Government’s minimum economic growth target of 8 per cent, the State Bank of Vietnam (SBV) has set a 16 per cent nationwide credit growth target for 2025, adding VNĐ2.5 quadrillion in new loans.

While the economy is recovering, challenges persist, prompting SBV to facilitate credit expansion by setting limits early and allowing for potential adjustments if needed.

SBV plans to maintain stable and gradually lower interest rates to make credit more accessible. State-owned commercial banks – Agribank, Vietcombank, VietinBank and BIDV – will be encouraged to cut costs to enable further reductions in lending rates.

Despite a slight decline in credit growth in early 2025, 75 per cent of loans have been allocated to production and business activities, increasing 1.37 per cent from late 2024, according to Nguyễn Đức Lệnh, deputy director of SBV’s branch for Region 2. Meanwhile, a VNĐ30 trillion lending package for agriculture and forestry is being effectively deployed.

The real estate sector, particularly housing, is also showing signs of recovery, with new initiatives supporting homebuyers under 35, which could stimulate demand and improve access to housing.

According to MBS, credit growth in 2025 is projected to reach 17-18 per cent, with retail lending playing a larger role due to increasing demand and last year’s low base. However, competition among banks to expand lending is expected to keep interest rates low throughout the year.

While mortgage lending has been slow due to tight housing supply, this trend may persist into the first half of 2025, further impacting bank profit margins. 

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