Achievable target: People go past the SBV building in Hanoi. The expected credit growth of the entire banking system in 2025 has been set at 16%. — Reuters
HANOI: Despite saying the credit growth target set for 2025 is reasonable, experts note that the growth must go hand in hand with credit quality and risk control to avoid bad debt increase.
The State Bank of Vietnam (SBV) recently sent a document to commercial banks to publicly and transparently announce the principles for assigning credit growth in 2025.
The expected credit growth of the banking system in 2025 has been set at 16%.
Analysts said this is an appropriate growth rate, which is likely to be achieved.
According to analysts from the MB Securities Co, the credit growth in 2025 will reach 15%-16% based on two main factors.
Firstly, the anticipated strong recovery of the economy in 2025, driven by improved production and trade activities as domestic and foreign demand increase.
This will create conditions for the SBV to maintain a loose monetary policy this year.
Secondly, the high disbursement rate of public investment will create new jobs and support credit demand, in line with Vietnam’s economic recovery goals and the implementation of large infrastructure projects in the 2021-2025 period.
Analysts from the ACB Securities Co (ACBS) also predicted that the target is achievable, as the corporate bond channel will find it difficult to recover strongly in the near future, so bank credit will still play an important role.
According to the ACBS analysts, the real estate market will gradually recover this year, along with the government’s promotion of public investment, which will stimulate credit demand and support banks’ lending yields in the second half of 2025.
Ho Chi Minh City Banking University lecturer Dr Chau Dinh Linh said there is a mutual relationship between credit growth and gross domestic product (GDP).
When credit grows, enterprises and individuals will have more capital to invest and expand business and consumption, which will help promote GDP growth.
This will drive credit growth, boosting the demand for capital, which, in turn, will promote demand for capital from the banking system, Linh explained.
According to Linh, the GDP growth rate was set at 6%-7% in previous years, with a 15% corresponding credit growth rate.
In 2025, the government wants to see the GDP growth rate go up to 8%, so credit growth must also increase accordingly.
“The credit growth rate of 16% this year is in line with the GDP growth target set by the government for 2025,” Linh said.
However, Linh said when credit growth increases, this can easily correspondingly cause a rise in bad debt ratio, if credit risk is not well managed.
Higher bad debts will create negative impacts in the future, slowing GDP growth in the longer term.
Therefore, credit growth needs to go together with credit quality, and it is necessary to build an effective credit management and risk control system.
It is also necessary to ensure the efficiency of credit use and direct capital flow into the government’s priority areas to promote sustainable GDP growth in alignment with long-term strategic orientation.
Dr Nguyen Huu Huan, from Ho Chi Minh City University of Economics, also opined that the credit growth rate of 16% is logical.
However, Huan said the growth rate of credit is not as important as the quality of credit.
Huan emphasised that credit growth must go together with quality management to avoid bad debts.
SBV deputy governor Dao Minh Tu affirmed that the 16% credit growth is just a guideline number in management terms.
The ultimate goal is to control inflation, economic growth and ensure the value of the Vietnamese dong.
According to Tu, in 2025, commercial banks will self-determine and calculate loans when there is a need for capital.
The SBV is looking to introduce credit management measures more suitable to the market mechanism, creating initiatives for banks.
However, Tu said the SBV will still have to control the increase in money supply to achieve its target of controlling inflation and ensure the safety of the banking system, especially banks that are pouring capital into risky areas. — Viet Nam News/ANN
