A discussion of bank loans at Agribank in Phu Yen. As of May, the banking sector's credit growth was 2.98 per cent, much higher than the 0.76 per cent increase recorded during the same period last year. — VNA/VNS Photo The Lap

At a conference to review the performance of the banking sector in the first half of the year and chart its tasks for the second, Binh said the target was quite possible.

He said last year, lending was nearly negative in the first half, but then accelerated to surge nearly 9 per cent in the second half.

Previously, many experts were concerned it would be difficult for the banking industry to meet the growth target as lending was still low.

However, SBV data showed that lending has gradually improved. By the end of May, credit growth was 2.98 per cent against 0.56 per cent for the same period last year, of which lending in Vietnamese dong increased 5.48 per cent.

"We gained a credit growth of nearly 9 per cent in the second half last year. If we can do it in H2 this year, lending for the whole year will rise 12 per cent as targeted," Binh said.

Binh said that the credit growth even could reach 15 per cent if economic conditions became better.

The banking industry must do its lending well to help the country gain an economic growth of 5-5.5 per cent this year, he said.

As consumption remained low, Binh said the SBV had so far recommended the Government raise public investment and Government bond issues in a move to boost consumption, reduce inventories, create jobs and ream out credit.

Binh said that although capital was more profuse than previously, loan-to- deposit ratio (LTD) of banks was still not safe. He said that although the LTD had reduced to 95-96 per cent from more than 100 per cent previously, the rate was still much higher than the rate of 60-70 per cent in other countries. In Viet Nam, the LTD should be kept at 80-85 per cent due to the country's restricted stock and capital markets, Binh said.

"According to the public, banks have an excess of capital, however, the banking industry should keep the current 95-96 per cent LTD and gradually lower it to 80-85 per cent to enable the banking system to stabilise in long term," Binh said.

As for lending interest rates, Binh said that they had been sharply cut in general, adding that loans with interest rates of less than 10 per cent currently accounted for 14 per cent of total loans. Loans with rates of 10-13 per cent made up nearly 50 per cent and loans with rates of more than 15 per cent represented for 12 per cent.

Binh said he expected the Government's approval for the Viet Nam Asset Management Company to begin operations next month would boost credit next time.

Binh also required banks to early close their outstanding gold accounts, confirming that the deadline was still June 30 as planned. - VNS