According to the State Bank of Vietnam (SBV), as of the end of June 2024, total outstanding loans reached nearly VND14.4 quadrillion, up 6 percent compared to the end of 2023. Meanwhile, at the end of May 2024, the increase was only 2.41 percent.
Furthermore, in June 2024 alone, the economy received an additional VND487 trillion (US$19,251,996,481). Thus, this growth rate has met the Prime Minister's directive for credit growth to reach 5-6 percent by the end of the second quarter of 2024.
The SBV branch in Ho Chi Minh City also reported that credit growth in Ho Chi Minh City in June 2024 increased by 2.03 percent compared to the previous month, the highest increase in the first six months of the year.
Many commercial banks reported that credit accelerated in June, mainly flowing into the production and business sectors. This shows a positive signal for the ability of businesses to absorb capital in the second half of the year.
Strong credit growth has also been anticipated by many banks. In particular, Vietcombank, Agribank, MB, and ACB all had higher growth rates in June 2024 compared to the previous months.
Deputy Director Nguyen Duc Lenh of the SBV Ho Chi Minh City branch assessed that with the positive developments of the commodity market, tourism services, consumption, and the real estate market, cash flow has returned to effective circulation. This will unlock capital flows, stimulate credit growth, and contribute to achieving the target of directing credit growth of about 15 percent in 2024.
The acceleration of credit in June 2024 occurred amidst a context where credit growth by the end of May 2024 only reached 2.41 percent. Among them, many commercial banks such as ABBank, SeABank, PVComBank, and BaoViet Bank experienced negative credit growth due to the low capital absorption capacity of the economy.
Therefore, at this time, many commercial banks continue to offer a series of preferential credit packages for businesses.
The report on the business situation in Ho Chi Minh City in the second quarter of 2024 by the Ho Chi Minh City Business Association (HUBA) also shows that 64 percent of businesses citywide have been coping with obstacles due to declining consumer demand while 50 percent of them have been bumping into difficulties as they lack new orders, 29 percent have been facing the problem of rising input material prices, and only 16 percent have been facing the dilemma of a lack of business capital.
However, according to HUBA, in business operations, capital is the first condition that businesses need.
Therefore, although only 16 percent of businesses recorded by HUBA face capital difficulties, most of them have fallen into a state of depleted cash flow to repay debts and supplement working capital for subsequent activities. Thus, interest rate support does not solve the root of the problem, which is to supplement cash flow.
In this context, both banks and businesses need additional conditions to solve the capital problem. In fact, Circular 06/2024 amending Circular 02/2023 on debt restructuring has just been extended by 6 months, until the end of December 2024, which the State Bank of Vietnam assesses will help alleviate difficulties for borrowers, thereby supporting economic recovery and development.
Commercial banks also stated that, through evaluation, businesses that are experiencing debt extension and restructuring still face difficulties, so debt extension is necessary. Thanks to not being transferred to the bad debt group, businesses can maintain better credit relationships with different banks, thereby obtaining good loans for investment.
General Director of ABBank Pham Duy Hieu stated that as the bank has recognized the weak economic absorption capacity in the first six months of the year, it focused on reviewing its customers. Businesses that are performing well will continue to receive reduced loan interest rates while businesses are facing difficulties but still operational will have their debts restructured and extended. The bank will collect debts from the rest.
According to General Director Pham Duy Hieu, in May 2024, bank credit still experienced negative growth, but by June, it had returned to positive growth. Small and medium-sized enterprises in the manufacturing and export sectors have asked for loans hoping that capital absorption will improve in the second half of the year. The bank is willing to maintain reasonable lending interest rates, even if deposit interest rates slightly increase, to boost credit growth.
Meanwhile, Deputy Governor of the State Bank of Vietnam Dao Minh Tu affirmed that credit is gradually improving, but even with slow growth, banks will not lower lending standards. Credit will continue to be tightly controlled for risks, ensuring system safety, and focusing on economic growth drivers. The state bank will continue to prioritize stabilizing interest rates as they are, keeping lending interest rates low, and is ready to support liquidity for commercial banks if necessary to ensure loan capital.
