State Bank of Viet Nam Governor Nguyen Van Binh assures National Assembly deputies that the year's 12-14 per ent credit growth target is within reach. — VNA/VNS Photo Phuong Hoa

HA NOI (Biz Hub) — The State Bank of Viet Nam's Governor, Nguyen Van Binh, yesterday told the Standing Committee of the National Assembly that banks this year would achieve 12-14 per cent credit growth.

Binh assured deputies that this would happen, despite concerns by the public that the idea was unworkable because of the economy's weak capacity to absorb the extra funds.

He said that credit for the Vietnamese economy had risen by an estimated seven per cent in the first nine months of the year.

He added that banks must add 5-7 per cent in the next three months to achieve the State Bank's target.

"September's growth is expected to be higher than the 6.87 per cent last September. Therefore, the 12-14 per cent target by year-end is absolutely achievable," Binh told the committee.

Last week, Cao Sy Kiem, who is chairman of the management board of DongA Bank and chairman of the Small and Medium Sized Enterprises Association, told Viet Nam News that the 12-14 per cent target would be very difficult to achieve.

He said that even a 10 per cent target was only achievable if Government programmes to bolster total demand were laid out in single effective steps - and taken seriously.

Kiem said the central bank had taken several steps to push banks to lend out, including non-collateral loans. However, bankers expected an improvement in total demand for funds, purchasing power and employment rates, which were necessary to bolster businesses and production.

In terms of foreign exchange issues, Binh said that 2014 was the third consecutive year of stability.

"Exchange rates have been always in line with the central bank's directions. We haven't intervened in the forex market in recent months. When we intervened, it was pro-actively to support exports," Binh said.

In June, the State Bank devalued the dong for the first time this year by weakening its reference rate by 1 per cent to VND21,246 per dollar.

This was done to help bolster exports and ensure the stability of dong currency during rising tension in the East Sea.

"The forex market has kept stable, which suggests that we may not have to devalue the dong by up to 2 per cent as vowed earlier this year. If changes are required, the margin will be 1-1.43 per cent," Binh said.

Binh said credit institutions had been more stable, ensuring the restructuring of the banking system and credit institutions were on track. — VNS