17:33 (GMT +7) - Tuesday 12/12/2017

Banking & Finance

NFSC: 11M credit growth at 15.3%

Released at: 14:30, 05/12/2017

NFSC: 11M credit growth at 15.3%

Illustrative image (Source: vov.vn)

Lending by banks rose 2.8% between October and November, according to National Financial Supervisory Commission report.

by Quang Huy

Credit growth during the first eleven months of this year has come in at 15.3 per cent, up from 13.5 per cent in the first ten months, the National Financial Supervisory Commission (NFSC) wrote in a monthly report.

Lending by banks increased 2.8 per cent between October and November, the commission added, noting that lending in foreign currency grew 12.3 per cent from the end of 2016; more than doubling the growth of 5.8 per cent in the same period last year. Loans in Vietnam dong increased 15.6 per cent during the period; lower than the 16.6 per cent increase in the same period last year, and accounted for 91.8 per cent of total credit.

Lending to the agricultural sector accounted for 8.1 per cent of total credit while that to real estate and construction made up 15.5 per cent, down from 17.1 per cent in 2016. Consumer lending continued to soar at a rapid pace, with growth hitting 59 per cent in the eleven-month period, driven mainly by home loans.

The NFSC said that mobilization growth slowed to 13.5 per cent between January and November, compared to 16.6 per cent a year earlier.

Liquidity in the banking system remained stable, buoyed by the State Bank of Vietnam (SBV) net injecting VND124 trillion ($5.46 billion) since the start of the year via foreign currency purchases and open market operations.

The average loan-to-deposit ratio (LDR) in the banking system stood at 86.9 per cent, up from 85.6 per cent at the end of 2016.

Interest rates increased by 70-80 basis points in the interbank market while major banks revised deposit rates upwards, the commission said.

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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