Hanoi (VNS/VNA) – Vietnam’s credit growth is slowing and can fallbehind the central bank’s target of 14 percent for 2019, causing concerns thatit could make it difficult for businesses to access bank loans during theremaining months of the year.

According to the State Bank of Vietnam (SBV), as of September 24, credit growthhad expanded 8.64 percent compared to the end of 2018. The rate was the lowestincrease in recent years, even lower than the 9.52 percent rise during the sameperiod in 2018.

In the SBV’s September survey on business trends at credit institutions, manycredit institutions also forecast that 2019 credit growth would increase by13.61 percent this year, lower than the central bank’s 14 percent target.

Growth has been slow in recent months. At the end of June, credit had increasedby 7.33 percent. The figure only inched up to 7.48 percent by the end of July,then to 8 percent at the end of August.

This seems to contradict lending reports from some banks which say they havenearly hit their credit growth quotas set by the central bank.

The central bank has also approved an increase to the credit growth limit in2019 for banks that have met Basel II standards, such as ACB (13 percent to 17percent), VPBank (12 percent to 16 percent), Techcombank (13 percent to 17 percent)and MBBank (13 percent to 17 percent).

However, the banks, which posted the highest credit growth in the first half ofthe year were mainly small- and medium-sized.

Credit growth at large banks, especially BIDV and VietinBank which account fornearly 25 percent of outstanding loans in the entire banking system, was verylow. VietinBank, for example, witnessed its credit increase by only 2.38 percentin the first six months of 2019.

The reason why State-owned commercial banks cannot boost credit growth is thattheir capital adequacy ratio was close to the minimum threshold set by the SBVwhile they were unable to raise capital.

The credit slowdown was also due to banks’ plans to restructure their balancesheets. Instead of raising credit growth as in previous years, many banks havebeen forced to reduce credit scale to meet the central bank’s Basel IIstandards.

This cut to credit supply has made many people worried, especially businesses.However, experts say banks are only tightening credit with highly riskyindustries and sectors, such as real estate.

Nguyen Quoc Hung, Director of the SBV’s Credit Department, said that bank loansfor the Government’s priority sectors had still increased significantly, ofwhich credit for high-tech applicable firms increased by 22.04 percent;exports, 13.2 percent; and small- and medium-sized enterprises, 11.42 percent.

Despite the credit slowdown, the country’s GDP growth hit a nine-year high of6.98 percent in the first nine months of the year. It was a positive signal asthe credit slowdown did not hit economic growth, meaning the economy has becomeless dependent on bank credit and relying more on other channels such as thesecurities and corporate bond markets./.