The total loans of the banking system are expected to grow by 16.33 per cent in 2017 against December last year, lower than the Government’s limit of 18 per cent.

The State Bank of Viet Nam released the information this week after conducting a survey on business performance trends of credit institutions in the second half of this year.

The survey also shows that credit institutions forecast the total capital mobilisation of the banking system to rise 16.02 per cent in 2017.

The General Statistics Office (GSO) has reported that credit growth in the first half of this year was 7.54 per cent, the highest in the past six years. The new record, considerably higher than the previous record of 6.28 per cent set in 2015, reflects the market’s significantly improved capacity to absorb capital, the GSO said.

Loans in the period were mainly focused on prioritised and large projects as instructed by the Government, accounting for roughly 50 per cent of total outstanding loans. Agriculture and rural industries, and small- and medium-sized firms received around 19 per cent and 22 per cent of the total outstanding loans, respectively.

Lending interest rates were 6-9 per cent per year for short-term loans, and 9-11 per cent per year for medium- and long-term loans. For customers with transparent finances, short-term lending rates ranged from 4-5 per cent per year.

The banking system’s capital mobilisation in H1 has risen by 5.89 per cent, and deposit interest rates have been relatively stable. Interest rates for dong deposits were 4.5-5.4 per cent per year for short term, 5.4-6.5 per cent per year for medium term, and 6.4-7.2 per cent per year for long-term deposits.

The Government has targeted credit growth of 18 per cent for 2017, but at the National Assembly meeting recently, some deputies suggested that this limit be raised so as to support economic growth.

Analysts at Bao Viet Securities (BVS) also recently forecast that the central bank may consider raising credit growth targets for several banks to aid economic growth.

The Government has been under intense pressure to loosen its monetary policy as the country is determined to meet its GDP growth target of 6.7 per cent for 2017. However, the fiscal policy has been struggling with disbursement of public investment, the BVS analysts said in a report. By end of May, disbursement of public investments had touched VND88 trillion, equal to only 30.6 per cent of the entire year’s estimates.

The BVS analysts said when fiscal policy does not support growth well, pressure will intensify on monetary policy. Increasing credit growth targets of several banks may be an option worth considering, the analysts said. — VNS