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NEWS UPDATES 13 September 2010

Viet banks can hit 25 percent loan growth

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Though credit growth has been weak in recent months, there is widespread optimism that the year's target of 25 per cent will be hit.

By July end, it stood at 12.9 per cent. Analysts say while the growth has not been as high as expected, it is acceptable considering the current economic situation and after interest rates rose sharply in the wake of the Government's subsidised credit programme.

To realise the objective of sustaining 6.5 per cent GDP growth rate and containing inflation at a low level, the Government has adopted several flexible monetary policies, including tightening money supply.

The global economy's slow recovery has also affected exports.

Pham Quoc Thanh, deputy general director of the An Binh Commercial Joint Stock Bank, says investment has yet to pick up after the recession and so enterprises and individuals are not borrowing much yet.

Nevertheless, analysts believe 25 per cent growth in credit is achievable since the annual economic and business cycles usually peak in the second half of the year.

Duong Thu Huong, general secretary of the Viet Nam Banking Association, believes since demand for dong loans from businesses will increase sharply in the fourth quarter, the target is within reach.

Credit growth depends on the economy's capacity to utilise capital, according to Tran Du Lich, member of the National Financial and Monetary Policy Consulting Council.

But he also points out that businesses did not borrow much in the last few months since they were sitting on large stockpiles of goods.

With the Government assisting them in selling their goods, they will soon be eyeing increased production again and begin to borrow, he says, meaning the credit growth target can be hit.

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