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Banking & Finance

NFSC: 10M credit growth at 13.5%

Released at: 06:29, 12/11/2017

NFSC: 10M credit growth at 13.5%

Illustrative image (Photo: VNA)

Figure up from 12.16% in first nine months, National Financial Supervisory Commission reports.

by Quang Huy

Total credit in Vietnam’s banking system expanded 13.5 per cent in the first ten months of the year, up from a 12.16 per cent increase in the first nine months, the National Financial Supervisory Commission (NFSC) wrote in a monthly report.

Medium- and long-term loans accounted for 53.7 per cent of total lending, down from 55.1 per cent at the end of 2016, while shorter-term loans made up the remaining 46.3 per cent, compared to 44.9 per cent ten months earlier.

Notably, lending in foreign currencies picked up 11.5 per cent in the ten-month period; higher than the 4.4 per cent in the same period last year, buoyed by larger imports.

The weight of lending for real estate has now fallen to 15.5 per cent of total credit from 17.1 per cent in 2016.

Consumer lending soared 58.6 per cent between January and October, “in line with the uptrend of consumption in the economy,” the report noted.

The commission said that capital mobilization grew by an estimated 12 per cent from end-2016; lower than the 14.7 per cent expansion in the same period last year.

It noted that bank liquidity remained stable at low levels in October, evidenced by interbank interest rates sliding 20 basis points from the previous month, with rates of overnight, one-week, and one-month loans being 0.9 per cent, 0.9 per cent, and 1.5 per cent per annum, respectively.

Liquidity was supported by the State Bank of Vietnam (SBV) pumping in around VND130 trillion ($5.72 billion) since the start of the year.

Since August, Prime Minister Nguyen Xuan Phuc has called for an increase in credit growth to 21 per cent from the SBV’s target of 18 per cent this year to help the country hit its economic growth target, potentially adding to concerns over the pace of new lending.

In July, the SBV sprang a surprise on markets by reducing the refinancing rate, rediscount rate, overnight electronic interbank rate, and the rate of loans to offset capital shortages in clearance between the central bank and domestic banks by 25 basis points.

The cuts, which come three years after the previous move, reduced the refinancing rate to 6.25 per cent and the rediscount rate to 4.25 per cent and were aimed at stimulating the pace of economic growth towards the 6.7 per cent target for 2017.

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