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Banking & Finance

VEPR: 21% credit growth target a challenge

Released at: 09:19, 22/10/2017

VEPR: 21% credit growth target a challenge

Illustrative image (Source: vov.vn)

Three-quarter figure of 11.02% leaves much to be done in fourth quarter, Vietnam Institute for Economic and Policy Research macroeconomic report notes.

by Hai Van

As at September 20, credit growth had reached 11.02 per cent since December 2016, higher than in the same period in previous years (10.8 per cent in 2015, and 10.5 per cent 2016), according to Vietnam Institute for Economic and Policy Research (VEPR)’s macroeconomic report for the third quarter.

The figure, however, is much lower than the target set by the government for the year.

“This will be a challenge for the realization of the credit growth target in the fourth quarter,” a representative from VEPR said.

Mobilization growth reached 10.08 per cent, lower than the 12 per cent recorded in the same period of last year.

The shortage of lending capital created by lower mobilization will be a barrier for the State Bank of Vietnam’s monetary policy in the last quarter, especially in reaching the targeted 21 per cent credit growth for the year as a whole.

Interest rates may increase, but it is continually difficult to mobilize deposits. Because the SBV bought a significant amount of foreign currency in the third quarter, of about $3 billion, to increase reserves, liquidity in the banking system remains plentiful, as proven by the decline in interbank interest rates since the second quarter.

Rates rose slightly late in the third quarter, by less than 1 per cent. As reported in September by the National Financial Supervisory Commission, liquidity in the banking system is currently sound, with a credit / system ratio of 87.2 per cent.

Cash demand in late 2017 will also increase pressure on banks’ liquidity and affect interest rates, which may cause barriers to lending interest rates falling by 0.5 per cent.

“The SBV should follow the market tightly to provide liquidity support as soon as possible,” the representative from VEPR said.

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