Banks are almost out of credit room to be granted more

This content was just announced by the State Bank late this afternoon. As of August 26, credit of the whole system increased by 6.63% compared to the end of 2023, "much lower than the target set at the beginning of the year", according to the State Bank.

The credit growth of banks is uneven, some units have low growth, even negative growth while some credit institutions have increased close to the assigned target. Accordingly, today, the management agency announced the additional credit growth. Credit institutions with a loan balance growth rate of 80% or more of the assigned target will have their credit limit adjusted based on the rating score.

"The addition of this limit is the initiative of the State Bank and credit institutions do not need to request it," the State Bank said, adding that it will continue to implement the policy of the National Assembly and the Government to gradually remove the measure of assigning credit growth targets.

By the end of the second quarter, 16 banks had credit growth higher than the industry average. Of these, 5 banks had credit growth of over 12%, including HDBank, ACB, Techcombank, LPBank and NCB.

This year, the industry-wide credit growth is expected to be around 15%. Based on actual developments, the regulator will set a target for credit growth and proactively adjust the limit (room) for each bank, without requiring them to submit additional requests. This is a difference in the State Bank's credit management compared to previous years, which is usually divided into many phases and requires banks to submit requests.

The formula for calculating growth targets for each bank is based on input factors by the State Bank, including: outstanding credit balance in 2023, rating score in 2022, outstanding credit balance sales in 2024 and unrecovered money.

Credit institutions, except for 100% foreign-owned banks and joint venture banks, must not exceed the prescribed credit balance at any time during the year. As for 100% foreign-owned and joint venture banks, the credit balance at the end of 2024 must not exceed the granted level.

In addition to credit growth, the management agency also requires banks to strictly implement instructions on monetary and credit activities and regulations on credit granting. Banks are required to continue to maintain stable deposit interest rates and increase the implementation of solutions to reduce operating costs and simplify lending procedures.