It is expected that the credit for the whole 2020 will increase by 11% compared to the end of 2019, the banking sector targets credit growth of 12%.

On December 24, the State Bank held a press conference on information on banking performance in 2020 and orientations for 2021.

According to the State Bank of Vietnam, as of December 18, the total means of payment M2 increased by 12.83% compared to the end of 2019 and by 14.62% over the same period in 2019.

At the press conference, Deputy Governor of the State Bank Dao Minh Tu said that from the beginning of the year to date, the State Bank has adjusted interest rates three times with a total reduction of 1.5-2% per annum and is one of the central banks in the region with largest policy interest rate cuts. As of November 2020, lending interest rates decreased by an average of 1% per annum compared to the end of 2019; the maximum short-term loan interest rate in VND for a number of priority sectors and fields is 4.5% per annum.

As of December 21, credit increased by 10.14% compared to the end of 2019 and by 11.62% over the same period in 2019.

According to the Deputy Governor, weak credit demand due to the negative impact of the Covid-19 pandemic has resulted in lower credit growth than in previous years.

Mr. Nguyen Tuan Anh, Director of the Credit Department for Economic Sectors of the State Bank, said the credit structure shifted in line with the structure of industries in GDP. Specifically, compared to the end of 2019, the outstanding loans for the agriculture, forestry and fishery sector increased by about 8.63% (accounting for 8.59% of the total outstanding loans of the whole economy); the outstanding loans for industry and construction increased by 8.9% (accounting for 28.38%); trade and service increased by 11.5% (accounting for 63.03%).

Credit continued to focus on production and business areas, priority areas, ie. compared to the end of 2019, credit for export increased by 10.4%; credit for agriculture and rural areas increased by 9.8%; credit for small and medium enterprises increased by 11%, etc.

Credit to the risk areas is strictly controlled, in line with the orientation of the State Bank.

To date, credit institutions have restructured the repayment periods for about 270,000 customers affected by Covid-19 with an outstanding loans of nearly VND 355,000 billion; provided interest exemption and reduction for nearly 590,000 customers with outstanding loans of over VND 1 million billion. Especially, credit institutions have given new loans at preferential interest rates (popularly lower than 0.5% -2.5% compared to pre-pandemic interest rates) for more than 390,000 customers.

Deputy Governor Dao Minh Tu also added that the credit for the whole 2020 is expected to increase by about 11% compared to the end of 2019 and in 2021 the banking industry sets a credit growth target of 12%.

Kylie Nguyen