Credit Growth Sees 0.6% Decline in the First Month of 2024

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The State Bank of Vietnam (SBV) has taken measures to boost credit growth by assigning the entire credit growth target of 15 percent for banks at the beginning of the year, a departure from previous practices where only a portion of the credit growth quota was allocated initially.

In the first month of 2024, the credit growth of the banking system decreased by 0.6 percent compared to the end of 2023, despite a strong acceleration in the last weeks of 2023. Credit in December alone rose by 4.56 percent, equivalent to more than VNĐ540 trillion.

The SBV aims for a credit growth target of about 15 percent in 2024, with the flexibility to adjust the goal according to the economic situation and developments.

Allocating the entire credit growth quota in the first month of the year is expected to stimulate aggregate demand and facilitate banks in providing capital to support economic growth amidst ongoing difficulties forecasted for 2024.

Vietcombank reported that its credit growth by the end of January decreased by 2.3 percent compared to last year. This decline is attributed to decreasing growth in retail and wholesale credit due to economic challenges, production and business difficulties, and a decrease in people’s income.

To address the low credit growth, the SBV issued an official dispatch to credit institutions urging them to implement effective credit growth solutions from the beginning of the year. Credit should be directed towards production, business, and priority sectors identified by the government to drive economic growth. Additionally, banks are instructed to carefully manage credit for potentially risky sectors to ensure safe and effective operations.

Based on historical trends, analysts from Việt Dragon Securities (VDSC) predicted that credit may experience a slight decrease or remain stable in the first months of 2024. Credit growth typically sees a surge in the last months of the year. Consequently, after the robust increase in the last two months of the fourth quarter of 2023, a slight decrease or stagnation in credit growth in the early months of 2024 is anticipated, particularly considering that the beginning of the year is usually a period of low business activity.