Data from the State Bank of Vietnam (SBV) shows that the credit growth was merely 3.65 percent at the end of the second quarter of last year, but it reached 6.08 percent by the end of the third quarter and jumped to 10.14 percent by December 21 last year. Credit outstanding balance increased by more than VND200 trillion in December last year, equivalent to the total additional credit outstanding balance of October and November. According to the SBV, this credit growth is consistent with the absorption level of the economy, concentrating on production, business, consumption, and priority fields under the Government's policy. It has significantly contributed to the restoration of production and business activities and the maintenance of the country's economic growth.
In comparison with the first half of the year, the credit of many commercial banks rose by three to four times in the last two months of the year. By the end of November last year, credit growth at Vietcombank was 10 percent and was expected to grow by 13-14 percent for the whole year. Many commercial banks, such as TPBank, VPBank, and VIB, saw credit climb to over 20 percent by the beginning of December last year.
Basically, in 2020, the credit demand was weak due to the negative impact of the Covid-19 pandemic, so credit growth was much lower than in previous years. According to many economic experts, last year, the SBV has done quite well in operating monetary policy, creating maximum conditions for credit limits for banks to stay healthy and have room for credit growth. It has contributed to the completion of the credit growth target of 2020 at 11-12 percent.
Accordingly, the SBV has loosened the credit growth limit for the second time in the last two months of last year for some commercial banks, with the highest level reaching 30 percent. Specifically, VIB was granted a credit growth limit of 30 percent in 2020. The bank's target at the beginning of last year was 10.5 percent and was raised to 19-23 percent in the first adjustment. TPBank received a credit growth limit of 28 percent, up from 11.5 percent at the beginning of last year. That of HDBank was raised from 11 percent to 25 percent, and that of MBB from 11.75 percent to 23 percent. Vietcombank also lifted the credit ceiling from 10 percent to 14 percent. Loosening room has helped banks to have more room for loans, promoting disbursement at the end of the year. After the credit room was loosened, Vietcombank has reduced interest rates for existing loans and new loans for enterprises across the country from December 15, 2020, to March 15, 2021. By the end of November last year, credit at this bank increased by 10 percent and was expected to reach 13-14 percent for the whole year. HDBank said it would achieve the set credit growth and be ready to welcome loan demand on the Lunar New Year after being loosened credit room.
Stimulus for loans
The increasing spending demand before the Lunar New Year is a golden opportunity for banks to promote lending. It is also the reason that recently, banks have simultaneously launched attractive consumer credit service packages, with interest rates from 5-7 percent per annum.
Specifically, ABBank currently has a package of VND2 trillion for personal consumption loans with interest rates ranging from 7.6 percent to 8.5 percent per annum to meet the needs for home loans, car loans, loans for house construction and renovation, consumer loans, or loans for supplementing working capital. MSB also has a credit package of VND7 trillion with interest rates from 6.99 percent per annum for individual customers. SHB offers a credit package of VND8 trillion for individual customers and SHB payment cardholders, with the interest rate for home loans adjusted from 7.5 percent per annum to 6.5 percent per annum. The interest rate for project housing loans, car loans, and consumer loans declined to 6.8 percent per annum.
Many banks have not only boosted consumer demand through individual loan packages but also promoted the program of consumer spending via cards. Particularly, JCB cardholders of VietCapital Bank will receive a discount of VND250,000 - VND600,000 when shopping at the websites of Thegioididong, Dien May Xanh, and Tiki until the end of January 31, 2021. Similarly, cardholders of Sacombank payment cards, who shop on Vnshop, are reduced VND100,000 per shopping bill twice a week at a maximum; Those who buy tickets for flights and book hotels via Sacombank Pay are lowered VND200,000. Moreover, Sacombank cardholders, when making online payments or swiping their cards via POS machines, will get a refund of 1 percent for international transactions and 0.5 percent for domestic transactions.
Besides stimulating consumer demand, banks have also offered many support packages to serve the peak business season at the end of the lunar year. For instance, Vietcombank spends VND2.5 trillion for preferential loans to support small and medium-sized enterprises to welcome the business season before the Lunar New Year, with interest rates from 5.8 percent per annum and less than a three-month term. From December 21, 2020, ACB has introduced a preferential financial package of VND10 trillion with lower interest rates than before the pandemic by up to 4 percent. With proactive moves of banks to get ahead of credit, the SBV estimates that credit growth of the banking industry for 2020 will possibly reach 11 percent compared to 2019. At the same time, credit growth is expected to be around 12 percent in 2021.