Good control of COVID-19 pandemic will accelerate credit growth: Insiders

Update: 11:07 | 13/04/2021
Credit growth will expand significantly from Quarter 2 and exceed the State Bank of Viet Nam (SBV)’s target of 12 percent for the year as a whole if the pandemic is brought under good control and the vaccination campaign proves effective, according to insiders.
Illustrative image (Photo: VNA)
Illustrative image. (Photo: VNA)

Expecting domestic recovery in its strategic investment report for 2021, the VNDirect Securities Corporation forecast that this year's credit growth would top 13 percent and interest rates could fall 20-50 percentage points in the context of loose monetary policy and low inflationary pressure.

According to Can Van Luc, BIDV chief economist, 10-15 percent growth is suitable, given that risks await commercial banks in the time ahead despite the economic recovery.

Potential bad debts are on the rise, which will eat into the bank’s profit, he stressed.

Meanwhile, the SBV’s Department of Credit for Economic Sectors forecast strong credit growth from Quarter 2, which could be higher than the SBV’s target of 12 percent, especially in the fields of industrial production, exports, trade and tourism.

Good domestic consumption, rosy exports, strong FDI attraction and disbursement of public investment will drive credit growth, it said.

Head of the department Nguyen Tuan Anh revealed that as of the end of March, credit growth was up by 2.3 percent compared to the end of 2020 and higher than the figure in the same period last year when credit growth in the economy inched up less than 1 percent.

From the outset of this year, the SBV was prudent in assigning credit growth for commercial banks, Anh said, adding that it outlined three scenarios for credit growth this year, with the maximum reaching 14 percent if COVID-19 was wiped out in Quarter 1, 10-12 percent if the pandemic lasts until June and social distancing measures are put in place, and 7-8 percent if it lasts until the end of the year.

According to economist Nguyen Tri Hieu, it is necessary to stimulate credit demand to achieve effective credit growth. However, banks should be able to control their customers’ sources in covering debts to ensure credit growth criteria and the quality of collateral.

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(Source: VNA)