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Banking sector implements solutions to promote credit growth

Update: 14-06-2024 | 12:41:35

Despite considerable efforts, the credit growth of province-based banking system during the first 5 months of 2024 only reached 1.33% compared to the beginning of the year. The banking sector has continued expanding credit supply, supporting the resolution of difficulties for production and business and promoting credit growth.

Slow growth

According to Truong Thi Thuy Lien, General Director of Lien Phat Leather Shoes Company, previously, even though enterprises wanted to borrow at high interest rates, banks found it difficult to accommodate, due to credit exhaustion. However, the situation has changed drastically. Banks are now actively seeking borrowers, loan procedures and disbursement are easier, and interest rates have decreased compared to the previous period, with around 6% per year. Nevertheless, enterprises are hesitant to borrow. "We are not borrowing anymore, and are even seeking ways to liquidate assets to reduce the burden of bank debt. In difficult circumstances, enterprises have to find ways to cut many costs, including interest expenses", Mrs. Lien added.

The banking sector is urgently implementing solutions to serve credit activities. In picture: Customers make transaction at BIDV - Binh Duong Branch

Due to various factors such as high input costs, many enterprises have no demand for borrowing capital, leading to low credit outputs at financial institutions. Tran Ngoc Linh, Director of BIDV - Binh Duong Branch stated: “Currently, interest rates for loans from banks are very low, and stimulus loan packages have been introduced at very favorable interest rates. However, credit did not  almost grow over the past 5 months compared to the beginning of 2024”. Mr. Linh believes that accelerating lending from this point is crucial to help banks achieve the targeted 14% credit growth by the end of this year.

At Vietcombank Binh Duong, total credit outstandings increased by 4.9% while other commercial banks had low or even negative credit growth. Total credit outstandings in the province in the first 5 months of 2024 reached more than VND331.9trillion, an increase of 1.33% compared to the beginning of 2024. This is the lowest credit growth rate in recent years.

Boosting capital support

According to explanations from commercial banks, over the past 5 months, both domestic and global economies faced many difficulties, significantly impacting the production and business activities of enterprises. Meanwhile, the lending interest is currently very low. Many banks offer home loans at an interest rate of only 5.9% per year, and loans to enterprises range from 6%-9% per year, depending on the term and program. In addition, customers with feasible business plans and good credit ratings enjoy preferential interest rates compared to regular borrowing. Therefore, lending interest rates are not as troublesome as in previous years. However, the low demand for production capital from many enterprises has resulted in low overall credit supply.

Nguyen Thai Minh Quang, Director of Vietcombank Binh Duong stated that compared to the province's average level, Vietcombank Binh Duong still had a relatively high growth rate in the first 5 months. However, in difficult economic times, some traditional customers have downsized production, reducing the demand for capital borrowing, which has somewhat affected credit growth.

According to Nguyen Thai Minh Quang, the economic situation is showing signs of improvement, with industries such as leather shoes, textiles, and wood receiving new orders, leading to better changes in credit demand. Vietcombank Binh Duong has continued connecting with relevant units to develop new potential customers, directly guiding customers through loan procedures, promptly disbursing capital and promoting credit growth.

Similarly, Tran Ngoc Linh, Director of BIDV - Binh Duong Branch believes that different enterprises and sectors have faced various challenges. However, each project and industry also has different advantages. Therefore, banks will continue reviewing their existing customer lists to advise and find the best investment directions for development. Additionally, banks are setting up plans and actively approaching new customers to accelerate credit growth.

Information from some credit institutions indicates that they are more urgent in speeding up solutions for credit activities, making greater efforts to achieve the set targets for 2024. One of the fundamental solutions is to implement bank-enterprise connection programs, proactively coordinate with local authorities to exchange, timely resolving difficulties in capital supply.

Vo Dinh Phong, Director of the State Bank of Vietnam - Binh Duong Branch stated that in the last 6 months of the year, to increase credit growth, the branch has directed credit institutions in the area to implement effective credit growth solutions along with quality control, disbursement into priority production sectors, and policies to resolve difficulties for production and business. Banks need to diversify products, credit services suitable for each customer segment and market, industry and production-business needs to promote disbursement progress for projects that play a role in promoting the local socio-economic growth.

Reported by Thanh Hong-Translated by Kim Tin

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