SBV’s Deputy Governor Dao Minh Tu speaks at the event. The credit structure in the first six months of this year continued to focus on production, business and the Government's priority industries. — Photo vietnambiz.vn

Credit growth of the banking system as of June 15 this year reached about VND12.32 quadrillion, an increase of 3.36 per cent compared to the end of 2022, according to the State Bank of Vietnam (SBV).

At a press conference announcing the results of banking activities in the first half of 2023 held in Ha Noi on Wednesday, the SBV said the credit increased by 8.94 per cent compared to the same period last year.

The credit growth was much lower than the same period of last year. As of June 9, 2022, credit increased by 8.15 per cent compared to the end of 2021.

The credit structure in the first six months of this year continued to focus on production, business and the Government's priority industries, which made a positive contribution to the country’s GDP growth. Besides, the credit flow was controlled in potential risk areas.

In 2023, on the basis of the nation’s 2023 economic growth target of about 6.5 per cent and inflation about 4.5 per cent set by the National Assembly and the Government, the SBV said it planned a credit growth of about 14-15 per cent, but there might be adjustments in accordance with developments and actual situations.

SBV’s Deputy Governor Dao Minh Tu said liquidity of the banking system has been abundant and commercial banks haven’t been pressured by the credit growth quota. The reason for the low credit growth of the banking system was mainly due to the sharp decrease in credit demand in the wake of difficulties faced enterprises and the economy.

The demand for investment, production and business decreased, which caused a corresponding decline in credit for production and business of firms and individuals.

Besides, some groups of customers had capital needs, but they had not met the banks’ loan conditions, or still have problems with legal procedures. After a long period of economic difficulties, the average risk level of customers is higher. This is especially true considering it is difficult for firms to prove their business performance effectiveness under the current context of high input costs, a difficult consumption market, and decreasing orders and revenue.

In addition, some customers, who have not recovered financially after the COVID-19 pandemic, have incurred bad debts or overdue debts, so commercial banks must be cautious in making lending decisions. They cannot lower their credit standards as they must prioritise the safety of the banking system.

For banks, according to the Deputy Governor, supporting credit access for firms does not mean lowering lending standards. Credit growth must go along with ensuring the right standards, asset quality and the safety of the banking system. — VNS