Vietnam allows banks higher lending targets to spur growth
HANOI, Aug 10 — Vietnam's central bank has allowed lenders to raise their credit growth targets to up to 27 per cent from a cap of 17 per cent in a bid to boost lending and spur economic expansion, a state-run newspaper said today.
Credit growth has been slow this year, as businesses are reluctant to take loans due to their high inventory and difficulties settling existing loans while banks tighten lending activities for fear of bad debt.
Tien Phong Bank, a partly private lender, has received the central bank's permission to expand lending by 27 percent this year, including investment in corporate bonds, an online report of the Vietnam Economic Times quoted the lender as saying.
It said the Military Bank may be allowed to raise its credit growth quota to 25 per cent from an initial target of 17 per cent.
The State Bank of Vietnam had earlier set credit growth targets for individual domestic banks from between zero to 17 per cent, trying to balance growth while keeping inflationary pressures in check.
Soaring credit growth in Vietnam recent years has stoked inflation, which rose to 23 per cent year-on-year last August before abating, ending the year at more than 18 per cent. Hanoi aims to keep annual inflation this year at 9 per cent.
The central bank has cut this year's annual credit growth target to 8-10 per cent from an initial target of 15 per cent.
Major lenders have said they will fail to fulfill the quotas, with Vietcombank estimating its credit growth at below 12 per cent and Sacombank at 10 per cent, state-run Saigon Giai Phong newspaper has reported. — Reuters