Total amount of outstanding loans as of the end of October is estimated to have increased by 10%, higher than the same period last year.

This information was stated by State Bank Governor Nguyen Thi Hong in a report sent to National Assembly deputies. According to Ms. Hong, credit growth as of October 31 reached 10.08% compared to the end of 2023. Compared to the same period last year, credit increased by 16.65%.

This information was stated by State Bank Governor Nguyen Thi Hong in a report sent to National Assembly deputies. According to Ms. Hong, credit growth as of October 31 reached 10.08% compared to the end of 2023. Compared to the same period last year, credit growth reached 16.65%.

However, banking leaders have acknowledged that the credit absorption capacity of businesses and people is still low. Because after Covid-19, many businesses have reduced or stopped production due to lack of orders, reduced operations, and declining sales, ect. Meanwhile, people tend to tighten and reduce spending, leading to low credit demand.

In the context of low credit growth across the system, Governor Nguyen Thi Hong said the management agency has proactively adjusted the target for each bank, without requiring them to submit additional requests.

In fact, in the early stages of this year, the credit growth of banks was uneven, with a number of units achieving low or even negative growth while a number of credit institutions achieved growth close to the assigned targets. As of the end of August, the management agency granted additional credit growth limits to banks to reach 80% of the credit target assigned at the beginning of the year.

In addition, the State Bank also requires banks to direct credit to priority areas and economic growth drivers. This is to limit the increase and occurrence of bad debts, ensuring the safe operation of the system.

Also according to the State Bank's report, in the first 10 months of the year, the agency kept the operating interest rate unchanged. Authorities continue to require banks to reduce costs to lower lending rates. Banks must also publicize average lending interest rates, the difference between deposit and lending interest rates to help customers access capital in an easy manner.

As of October 20, the lending interest rate decreased by 0.76% compared to the end of 2023. However, according to this agency, reducing interest rates in the coming time is "very difficult". The reason is that recently, lending interest rates have tended to decrease sharply. The continued increase in demand for credit capital will put pressure on the interest rate level. Meanwhile, reducing domestic VND interest rates will increase pressure on exchange rates and the foreign exchange market.

Not to mention, the State Bank believes that the pressure on capital supply of the system to the economy is still great in the context of difficulties in mobilizing from the corporate bond and securities markets. This poses great risks in terms of maturity and liquidity for the banking system due to having to mobilize short-term funds for medium and long-term loans.

Kylie Nguyen